Full Year Results

RNS Number : 4616D

Empiric Student Property PLC

03 March 2022

3 March 2022

Empiric Student Property plc

("Empiric" or the "Company" or, together with its subsidiaries, the "Group")

FULL YEAR RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2021

Good progress in 2021 with increasing confidence in outlook

Empiric Student Property plc (ticker: ESP), the owner and operator of premium student accommodation serving key UK universities, today reports its annual results for the 12 months ended 31 December 2021.

Duncan Garrood, Chief Executive Officer of Empiric Student Property plc, said:

" We are seeing improving trends in demand and occupancy for Academic Year 22/23 with bookings to date broadly returning to pre-Covid levels. We are increasingly encouraged by the outlook for our business and the wider sector.

Our guidance for revenue occupancy for the 2022/23 academic year is 85% to 95% and we are targeting the top end of this range, assuming no further market disruption. We have resumed dividend payments and remain committed to our policy of a minimum of 2.5p in 2022 and to pay fully covered and progressive dividends going forward.

We are progressing well with our strategy of further enhancing the quality of our portfolio and business. W e have commenced two outstanding developments and remain on track with our refurbishments. W e are continuing to make further non-core disposals, with nine assets sold to date for £44.6 million and above book value, and we recently made our first acquisition since 2018, all in line with our strategy of recycling capital, building clusters in key cities and driving operational performance and returns.

With our continuing support given to our students, our establishment of clear and ambitious objectives to become a sustainable and net zero carbon business , we are protecting and enhancing the Group's long-term sustainable value and profitable growth for all our stakeholders. "

HIGHLIGHTS

	31 December 2021	31 December 2020	change
Revenue	£56.0m	£59.4m	-6%
Property costs	£23.1m	£22.7m	-2%
Gross margin	58.8%	61.9%	-5%
Administrative expenses	£10.5m	£9.8m	+7%
Adjusted earnings per share	1.65p	2.30p	-28%
Gain on disposal of investment property	£1.7m	-	+100%
Change in fair value of investment property	£17.6m	(£37.6)m	+147%
Profit/(Loss) before taxation	£29.2m	(£24.0m)	+222%
Dividends paid	£15.1m	£7.5m	+101%
Property valuation	£1,022m	£1,005m	+3%
EPRA NTA Per share	107.4p	105.0p	+2%
Total return (%)	4.6%	(3.6%)	+228%
Loan to value (%)	33.1%	35.4%	-6%

Financial Performance

· Revenue in 2021 of £56.0 million (2020: £59.4 million), as occupancy for the first eight months in academic year 20/21 was 65% compared to 84% for the same period in 2020.

· Like for like rental growth for the academic year 20/21 was 1.3%, as we prioritised occupancy levels over rental growth.

· Started the academic year 21/22 at 81% revenue occupancy, which has increased to 84% since then, at the upper end of our guidance.

· Property costs were £23 million, up by 2%, mainly driven by having to pay council tax on empty rooms as a result of lower occupancy levels.

· The impact of reduced revenue compared to pre-COVID levels produced a gross margin for the year of 58.8% (2020: 61.9%).

· Administration expenses were £10.5 million, below our £11 million guidance.

· Adjusted Earnings for the year were £10 million (2020: £13.9 million), with Adjusted earnings per share of 1.65 pence (2020: 2.30 pence).

· Net gain on disposal of four assets of £1.7 million.

· The net profit from a change in the fair value of investment properties was £17.6 million (2020: loss of £37.6 million).

· Profit before tax of £29.2 million (2020: loss of £24.0 million), with basic earnings per share of 4.84 pence (2020: loss of 3.97 pence).

· Resumed dividend payments in Q4 2021 with a payment of 2.5p.

· Property portfolio valued at £1,022 million (2020: £1,005m). On a like for like basis, the investment property valuation increased by 3%.

· Net Initial Yield improvement to 5.3% (2020: 5.6%).

· EPRA Net Tangible Assets ("NTA") per share up 2.3% to 107.4 pence (2020: 105.0 pence).

· Total accounting return, the sum of income and capital growth, increased by 228% to 4.6% (2020: minus 3.6%).

Good progress on all key commercial priorities to further strengthen the Group's position: actively managing our property portfolio; strengthening our brand proposition; driving performance through data analytics; delivering consistently high customer service; and developing our people.

Further enhancing our business and portfolio

During the year

· Successfully launched our new revenue management system, with all bookings for the 2021/22 academic year now managed in-house. This has delivered annualised cost savings of £1.5 million per annum from September 2021 as well as increasing customer acquisition and revenue.

· Sold four non-core assets for £18.1 million, above book value.

· Pilot refurbishments successfully completed in Bristol and Leeds on time and on budget, which are on track to achieve their target IRR of 9-11%.

Following the year end

· Sold five non-core assets for £26.5 million, in line with the latest book value and our portfolio realignment strategy.

· Acquired t he freehold post period end of a new 92-bed purpose-built studio asset in a prime location in Bristol city centre for £19 million with significant reversionary potential, helping to build out our presence in a key target city. W e will have a total of 404 beds in the city for the academic year 2022/23.

· Two developments underway in Bristol and Edinburgh will complete in time for the forthcoming academic year and provide accommodation for an additional 212 students.

Strong balance sheet

· Loan to Value for the Group was 33.1%, broadly in line with our 35% long-term target.

· At 31 December 2021, before deduction of loan arrangement fees, the Group had committed investment debt facilities of £420 million, of which £375 million were drawn down. £277 million of this debt is fixed and £98 million is floating. The aggregate cost of debt was 3%, with a weighted average term of 4.9 years.

Responsible business

· Throughout the pandemic, we have taken a supportive approach to our students' situation, granting later check-ins, deferments, cost-free cancellations and refunds. Online reviews suggest this has helped enhance our already strong brand reputation and drive future customer acquisition.

· Our ESG Committee completed a detailed materiality assessment and have agreed clear metrics for our ESG programme including setting a target of achieving net zero in our own operations no later than 2035.

· Commitments to improving health and safety in relation to work on external wall systems and fire stopping.

Encouraged by the outlook for our business and the wider sector

· As at 2 March 2022, bookings of 36% for the 2022/23 academic year (20% for the 2021/22 academic year as at 16 March 2021), and broadly in line with our pre-Covid bookings at this stage of the year.

· Targeting revenue occupancy for the 2022/23 academic year of 85% to 95% and expect to be towards the top of this range, assuming no further disruption.

· In 2022, we intend to start paying a minimum dividend of 2.5p per share per annum, on a covered and progressive basis, with a view to increasing this as occupancy levels normalise.

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

Empiric Student Property plc	(via Maitland/AMO below)
Duncan Garrood (Chief Executive Officer)
Lynne Fennah (Chief Financial & Sustainability Officer)

Jefferies International Limited	020 7029 8000
Tom Yeadon
Andrew Morris

RBC Europe Limited (trading as RBC Capital Markets)	020 7653 4000
Marcus Jackson Elliot Thomas

Maitland/AMO (Communications Adviser)	07747 113 930 / 020 7379 5151
James Benjamin	empiric-maitland@maitland.co.uk
Alistair de Kare-silver

The Company's LEI is 213800FPF38IBPRFPU87.

Further information on Empiric can be found on the Company's website at www.empiric.co.uk .

Notes:

Empiric Student Property plc is a leading provider and operator of modern, predominantly direct-let, premium student accommodation serving key UK universities. Investing in both operating and development assets, Empiric is a fully integrated operational student property business focused on premium studio-led accommodation managed through its Hello Student® operating platform, that is attractive to affluent growing student segments.

The Company, an internally managed real estate investment trust ("REIT") incorporated in England and Wales, listed on the premium listing segment of the Official List of the Financial Conduct Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in June 2014.

Results Presentation

The Company presentation for investors and analysts will take place via a webcast and conference call at 8.30am (GMT) on the day .

For those who wish to access the live webcast, please register here:

https://www.investis-live.com/empiric/620d0348f73bbc23003f9a6b/pymdi

For those who wish to access the live conference call, please contact Maitland/AMO at empiric-maitland@maitland.co.uk or by telephone on +44 (0) 20 7379 5151.

The recording of the webcast/conference call will also be made available later in the day via the Company website: http://www.empiric.co.uk/investor-information/company-documents

Annual Report

Hard copies of the Annual Report and Accounts will be sent to shareholders, along with the proxy form and notice for Annual General Meeting to be held on 23 May 2022. These documents will also be made available on the Company's website at www.empiric.co.uk . In accordance with Listing Rule 9.6.1, copies of these documents will be submitted to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

CHAIRMAN'S STATEMENT

Driving sustainable value

"We have made good progress on actively managing our portfolio, with asset sales during the year and an acquisition post year end. We have continued to support our students as well as resuming dividend payments, announcing new Group targets and strengthening our team."

2021 was a difficult year. COVID-19 having had a full 12-month impact on occupancy, and, as a result, our financial performance. However, we have made good progress in implementing our strategic priorities laid out last year, we have continued to strengthen our leadership team, and have successfully completed the full insourcing of the business.

Environmental, Social and Governance ("ESG")

At the core of our proposition is a commitment to create a sustainable, positive, environmental, social and economic legacy for all our stakeholders.

During 2020 we created a Board-level ESG Committee, tasked with providing a roadmap to deliver a significant step change in our approach to ESG.

I am delighted that Lynne Fennah our experienced CFO and COO has been appointed our Chief Sustainability Officer, relinquishing her COO role, bringing a real focus to ESG whilst ensuring that we continue to deliver a sustainable business for all stakeholders.

During 2021 we completed our first formal materiality assessment where we identified our four key topics which we will build our ESG Roadmap around. We can also announce that we will target becoming net zero within our business by 2035.

Health and Safety

Health and Safety remains a critical area of attention for your Board. Having insourced our FM activities we have complete control of our health and safety environment. We continue to enhance our monitoring and make our buildings as safe as possible. We continue to focus, in particular, on ensuring that our approach to fire safety takes full cognisance of current and emerging best practice.

Our People

Our continued progress is only possible because of the dedication and ability of all of our people. I would like to thank everyone in our business for their contribution over the past year. Our people are extremely important, they are at the heart of our customer proposition and core to us living our brand. Our 2021 colleague engagement survey showed engagement scores of 82%.

Our Colleague Forum, formed of colleagues across the Group, met a number of times during the year to discuss a variety of topics.

Board Appointments and Succession

On 27 September 2021, we announced that Jim Prower would be stepping down from his role as Senior Independent Director of the Company with effect from 1 October 2021, as part of a planned succession process. Jim had served on the Board for over seven years, providing valuable insights and supporting the financial and operational transformation of the Group. The Board has benefitted significantly from his expertise, commitment and wise counsel and Jim leaves with our very best wishes for the future.

On 1 October 2022, Martin Ratchford was appointed to the Board as an independent Non-Executive Director and Chair of the Audit and Risk Committee. Martin brings a wealth of invaluable real estate and finance experience having held a range of senior finance and leadership roles in a number of UK and International real estate companies.

Also, on 1 October 2022, Alice Avis was appointed Senior Independent Director.

The Board effectiveness review concluded that the Board and its Committees continued to operate effectively throughout 2021.

Dividends

On 29 October 2021, the Board announced its intention to recommence dividend payments which were suspended in March 2020 due to the uncertainty arising from the COVID-19 pandemic. On 3 December 2021, a payment of 2.5 pence per share was made. The payment comprised the PID distribution requirement of 1 pence per share for the 2019 financial year and 1.5 pence per share for 2020.

Regular dividend payments have been reinstated from 1 January 2022, paid quarterly, fully covered, and progressive in nature. Given our current assessment of our 2021/22 academic year revenue levels, and assuming no further adverse impact from the pandemic, the Board is expecting to pay a minimum dividend of 2.5 pence per share per annum in 2022 with a view to increasing this as occupancy levels normalise.

AGM

Our 2022 AGM will be held on 23 May 2022. Further details about the AGM will be provided in the AGM Notice.

Looking Forward

Whilst near-term uncertainty, caused by the COVID-19 pandemic, remains, we are seeing improving trends in demand and occupancy in our target market. We are making good progress in implementing our revised strategy, our senior leadership team is now fully in place and the operational transformation of the business is now complete. We have re-commenced dividend payments, albeit at prudent levels, and remain committed to a policy of progressive, fully covered dividend payments going forward. We remain confident that we have the right proposition, targeted at the right market segment, and can see robust and consistent future growth.

MARK PAIN

Non-Executive Chairman

2 March 2022

OUR MARKET

A resilient sector

In 2021, the PBSA sector rebounded from the COVID-19 pandemic in a buoyant fashion, driven by the underlying growth in the UK's full-time ("FT") student population. Confidence is returning to the market following reduced low occupancy rates in 2020/21 as learning shifted online and restrictions on travel were implemented due to COVID-19. International mobility has been impacted by the pandemic, but the PBSA sector has remained much more resilient than analysts had initially projected. Domestic students partially filled the void left by international students, while in some markets, certain groups of international students rose to boost overall occupancy rates.

Remote study has worked for many students, although it is a weak substitute for on-campus tuition and the holistic student experience. As a result, PBSA occupancy rates recovered considerably in 2021 as restrictions gradually lifted. At the end of Q3 2021, JLL reported that 90% of beds were leased for the 2021/22 academic year, compared with 83% for the comparative period in 2020/21.

In the year to September 2021, the CBRE PBSA Index reported total returns of 7.7% for the 250 assets in the index, 2.8% higher than in 2020. Capital value growth for PBSA assets recovered from -0.4% in the year to September 2020 to 2.2% in 2021. Notably, capital growth in Super Prime Regional markets grew from 0.3% in the year to September 2020 to 4.7% in the same period to September 2021. The performance gap between the regional markets (Super Prime and Prime) and Central London narrowed. Assets in the capital achieved total returns that were 0.3% higher than those in the regions, a fall from the 2-4% outperformance seen over the previous four years, mainly due to falling net income return for London assets. Assets in Secondary locations saw capital values fall again in 2021, but not as dramatically as in 2020. The Empiric portfolio is well aligned to the best-performing locations with 92% by value classified as either London, Super Prime Regional or Prime Regional in the December 2021 portfolio valuation, compared with 86% in December 2020.

Only 58% of demand for PBSA is currently being met

Strengthening Student Demographics

Increase in UCAS Applicants for 2021/22 academic year: 3%

In UCAS's latest End of Cycle Report, strengthening demand statistics for the 2021 admissions cycle were published. In 2021, 749,570 students applied to higher education institutions in the UK, 20,790 students (+2.9%) higher than 2020. Applications from non-EU domiciled students rose 12.8% to 111,255, somewhat offsetting the significant fall in applications from EU domiciled students, which fell 40.1% to 31,670.

Overall student acceptances fell slightly from a record in 2020, with 562,060 students accepted by higher education institutions, mainly due to a 50% fall in acceptances from EU students. However, only higher tariff providers reported year-on-year growth in acceptances (1.33%), with both medium and lower tariff providers reporting declines of 3.72% and 1.88% respectively.

Following Brexit, the UK left the EU's Erasmus+ scheme in 2020, before which it was the fourth most popular destination for Erasmus+ students. The UK created the "Turing Scheme" as a replacement for UK domiciled students, but the scheme does not provide reciprocal funding for UK inbound placements. Acceptances from UK and non-EU domiciled students rose by 6,605 (+1.4%) and 1,275 (+2.4%) respectively. In 2020, UCAS reported 24% and 35% year-on-year increases in applicants from China and India respectively with growing demand from the USA. This trend continued in 2021, with Chinese applicants growing by a further 4,135 (+15.8%) and India by 1,980 (+21.7%). Demand from overseas students is predicted to continue growing as the appeal of UK higher education institutions strengthens and levels of household wealth in these countries rise. Savills report that between 2021 and 2026, the number of households earning above $70,000 per annum is forecast to grow annually by 13% in China and 24% in India.

Growing domestic demand for places at UK higher education institutions has been fuelled by sustained growth in the UK's 18-year-old population and increasing participation rates. UCAS reports that the proportion of UK domiciled 18-year-olds accepted by UK providers increased from 37% in 2020 to 38% in 2021, the 9th consecutive year-on-year increase. The demographic surge is expected to increase the number of 18-year-olds in the UK by over 160,000 in the next decade. Postgraduate courses are also becoming increasingly popular. HESA report that 468,575 students enrolled on a full-time postgraduate course in the UK in AY 2020/21, 16% higher than the previous year. Enrolments from non-EU domiciled postgraduates also rose by 16%.

Student Demographics

	Applicants				Acceptances
				%				%
Domicile	2020	2021	Change	Change	2020	2021	Change	Change
UK	577,260	606,645	29,385	5.1	485,400	492,005	6,605	1.4
EU	52,865	31,670	-21,195	-40.1	32,320	16,025	-16,295	-50.4
Non-EU	98,660	111,255	12,595	12.8	52,755	54,030	1,275	2.4
Total	728,785	749,570	20,785	2.9	570,475	562,060	-8,415	-1.5

Source: UCAS End of Cycle Report 2021

PBSA Development Pipeline - Constrained Supply

The demand-supply imbalance of high-quality assets in prime locations market remains. According to research combining HESA 2019/20 data and PBSA supply for 2021/22, only 58% of demand for PBSA is currently being met, 66% including consented pipeline. The UK market has seen development volume recover significantly as students return to campus. Over 30,000 beds were completed in 2021, more than double the 14,000 achieved in 2020, a year in which the pandemic disrupted construction programmes and put many developments on hold. A further 21,000 beds are estimated to be in the pipeline for delivery in time for the 2022/23 academic year. However, in the last five years planning application activity has slowed significantly. In the first seven months of 2021, less than 15,000 were submitted for approval, compared with 32,000 during the same period in 2017. This is partly due to some early adopted markets becoming saturated, reducing opportunities for developers. Some markets have been more popular as developers pre-empt emerging and increasingly restrictive local planning authority policies. These include affordable housing requirements and location-specific policies intended to control future development. Furthermore, the impacts of Brexit, COVID-19 and inflationary pressure has led to rapidly rising construction costs, raising challenges for developers over the viability of some projects. These factors may compound to restrict the supply of new PBSA beds in 2022, despite the projected demand growth.

Sector Investment - Strong Investor Appetite

Investor appetite continued to be strong throughout 2021, reflected in the year's transactional activity. In the second half of 2021, investors spent over £2.5 billion on UK PBSA, taking total investment volume for the year to £4.4 billion. In 2020, investment reached £5.9 billion, of which Blackstone's acquisition of the IQ portfolio contributed £4.7 billion. Analysis of transaction volume in 2021 shows a much more active market in 2021, with 35% more deals being struck than in 2020 and 6% more than in 2019. The year saw numerous landmark portfolio deals as an influx of overseas capital was drawn to UK PBSA. Most notably, in December 2021, Blackstone and APG acquired the GCP Student Living portfolio for £1.1 billion, reflecting £277,300 per bed across 4,100 beds in 11 assets.

In the 18 months from March 2020, when COVID-19 lockdown restrictions began, pricing held firm at pre-pandemic levels reflecting the reliance of the sector. With a greater variety and larger weight of capital targeting the sector, the deals in the markets are now reflecting record sharper yields. Subsequently, the year saw some record-breaking single asset deals such as iQ's purchase of 347 beds from Nido in West Hampstead for over £120 million reflecting a yield of 3.80%. Portfolio deals were prevalent in Super Prime Regional and Prime Regional markets at sharper yields too. Notably, in February 2021, Greystar purchased 2,163 beds from Round Hill Capital for £291 million (4.75%) across five assets in London, Glasgow, Coventry and Bristol and Apollo's purchase of 1,655 from Crown Student for £210 million based in Cardiff, Norwich and Portsmouth reflected a yield of 5.25%. In 2021, Asian investors committed over £400 million to UK PBSA. Greystar continued a trend of portfolio deals in January, securing the acquisition of "Project Jura" from Downing for £365 million. The portfolio of 1,807 beds in London, Manchester and Coventry traded for £202,120 per bed.

Market Yields - Best in Class, Direct Let

Market transactions in 2021 have supported yield compressions reported by the leading valuers. CBRE report that between Q4 December 2020 and Q4 December 2021, Best-In-Class Direct Let Central London, Super Prime Regional and Prime Regional yields compressed by 25 basis points, 10 basis points and 25 basis points respectively. After considerable softening in previous years, Secondary Regional yields have stabilised, but remain more polarised from the stronger markets with a risk of further weakening.

In the coming years, more investment is expected to be drawn to the PBSA sector as investors look for stable diversified income returns and counter-cyclical performance in the face of potential economic downturn. With the worst of COVID-19 restrictions widely accepted to be in the past, investors are looking past short-term issues to a growing demand pool. The subsequent growth in demand for high-quality PBSA will continue to outstrip the supply of beds particularly in the prime market. In addition to this undersupply, ongoing uncertainty and investment risk in other global markets is likely to be a key driver for investment into UK student assets. This also follows a wider trend as institutional investors pivot towards assets in the residential sector.

Market Yields - Best-In-Class, Direct Let

	December 2021		December 2020
	Current	Trend	Current	Trend
Central London	3.65%	Stronger	3.90%	Stronger
Super Prime Regional	4.65%	Stronger	4.75%	Stronger
Prime Regional	5.00%	Stronger	5.25%	Stable
Secondary Regional	8.00%	Stable	8.00%	Weaker

Source: CBRE Student Sector Investment Yields, December 2021.

BUSINESS MODEL

Our business model combines an attractive portfolio of high-quality student homes with an efficient in-house operational platform. Together, our operations and assets enable us to create value for all our stakeholders. This allows us to generate attractive returns for our shareholders and build a strong platform for long-term growth.

Key Strengths

Buildings

We have a diverse and attractive portfolio of properties that offer high-quality and safe accommodation to our customers.

Our People

Our people are key to our customer journey. Our passionate and committed colleagues allow us to deliver a high level of service to our customers while maintaining cost control.

Specialist Knowledge

We have the knowledge to develop, acquire and operate high-quality, sustainable student accommodation assets.

Brand

The Hello Student^® brand has continued to grow, becoming a leading brand and giving us a clear identity in the student property market.

Financing

We finance our business through a combination of shareholder equity and debt facilities. We have strong liquidity and good relationships with our lenders.

Technology

We continue to leverage technology to augment business processes that drive efficiencies operationally, financially and commercially whilst also improving our user and customer experiences.

How We Add Value

Our Culture

Our people and customers are our key focus and we are here to deliver excellent seamless service and financial returns through working together.

Select Locations/Specifications

We are selective about where we invest, with a focus on the towns and cities that are home to the most successful universities and where student numbers are rising faster than average. We select sites based on their compatibility with the types of accommodation we provide and their proximity to universities and amenities.

Our buildings have on average around 100 beds, which helps to foster a more homely, collegiate feeling to living. However, through our clustering strategy we are able to yield the economies of scale which are generated from larger buildings.

Develop/Buy

Developing assets allows us to acquire them at a greater yield on cost than buying standing assets. Forward-funded projects are typically less complex than direct developments and have a lower risk profile, as the planning, construction and time risk lies with the third-party developer. These projects also have lower staffing requirements and benefit from a forward-funding coupon charged to the developer. However, direct development delivers higher-yielding assets than forward funding. We have a strong proven track record in direct development.

We also buy standing assets when a specific opportunity arises which complements our portfolio.

Operate

Our assets are marketed through our Hello Student^® platform. This platform gives us a clearly identifiable brand which helps to offer our customers a range of options. Encouraging our people to follow our values helps to increase ownership and pride in our homes. This ensures that customers have the best experience possible, helping to drive occupancy, rents and profit.

We have a student welfare programme in place to ensure that we provide the support that our customers need during their stay with us.

Reinvest

We intend to hold our buildings for the long term. However, we may sell an asset if we see an opportunity to create more value for shareholders by reinvesting the proceeds. We therefore continually review the portfolio to ensure our capital is effectively allocated.

Outputs for our Stakeholders

Customers

Our customers benefit from having a great home to live in during their studies, at a rent that represents value for money.

NPS in the Global Student Living Index: +22

Higher than PBSA private hall average +20

Our People

Our people have the opportunity to develop their careers in an exciting and growing sector.

Colleague Engagement Score: 82%

Shareholders

Shareholders benefit from Total Returns which are underpinned by income and continued rental growth.

Total Return target of 7-9%

Communities

The communities around our assets benefit from increased employment, reduced pressure on local housing stock, and from the improvements we fund to social infrastructure in the surrounding area.

Net Carbon Neutral Target by 2035

OUR STRATEGY

Continuing to make progress against our strategic objectives.

Strategic area	Strategic objective	Progress in the year	Associated KPIs	Key aims for 2022	Associated risks
1. Customers	Our customers are at the heart of what we do. We want our customers to have a great experience and stay with us year after year and to recommend us to their friends. We aim to achieve customer satisfaction by building welcoming communities in our homes and by giving our customers a sense of safety, wellbeing and belonging in an environment of high-quality communal areas and facilities. We aim to deliver a friendly personalised service and be there when our customers need us.	- Our net promoter score was +22, compared to PBSA private hall average +20. - Developing our 24-hour, seven-days-a-week, staff cover in all our cities and seeing the benefits which come from this. - We continued to strengthen our relationship with a number of key universities.	A, B, C, D, E	- Roll out a student app so that students can access all services in one place. - Increase customer NPS score even further in 2022.	E1, E2, E4, I1, I2
2. Brand	We want to raise awareness of the Hello Student^® brand among students, to support our premium accommodation and service offering. We want to become known as a responsible provider.	- We have undertaken in-depth customer research to understand what is important to our them and how we will shape our future brand proposition. - Begun to develop and built a new brand platform that steers how we communicate with our customers, our look and feel and how we deliver our customer experience.	A, B, C, E, F	- Review the design and layout of both the Hello Student^® and Empiric corporate website. - Launch a rebranding exercise to ensure that the Hello Student^® brand is relevant and appropriate for the coming years.	E1, E2, E4, I1, I2, I4
3. Our People and Operations	We are committed to making Empiric "a great place to work" and destination of choice for candidates wanting to work in the student accommodation sector; through this we will be able to deliver a high standard of customer service. We will continually enhance our in-house functions and performance coach our colleagues to help them provide the best and most efficient customer service experience.	- We have refreshed our Company values. - We have provided mental health first aid training to all people managers. - We received a "One to Watch" rating by the Best Companies survey on our debut rating.	A, B, C, D, E, F	- Embed the new Operations Director who joined in January 2022. - Open a new strategic hub in Birmingham where we will embed our support teams.	E1, E2, E4, I1, I2, I4
4. Building	We will maximise the value from the asset portfolio by actively managing the portfolio to recycle capital and to improve returns and sustainability. This is achieved by maintaining a portfolio of investments with attractive yields and rental growth opportunities.	- We disposed of four non-core assets at a premium to their book value. - We completed two refurbishments in Bristol and Leeds. We achieved this while students remained in residence around the refurbishment site with no disruption.	A, B, C, D, E, J	- Complete the Bristol St Mary's development providing an additional 153 beds in the city. - To launch new redevelopment schemes and continue our portfolio review, looking at disposal, refurbishment and acquisition targets.	E1, E2, E5, I4
5. Shareholders	We want to provide our shareholders with attractive sustainable returns. This is achieved through improving the profitability, performance and size of our portfolio.	- We recommenced the payment of dividends in Q4 2021 with a view to returning to quarterly dividend payments in 2022. - Completed a materiality assessment of our key ESG priorities and have commenced our roadmap. - The progress achieved in all of the above strategic areas contributes to shareholder returns.	A, B, C, D	- Continue to deliver on our five key priorities as laid out on pages x to y. - Beyond COVID-19, we are positioned to return to full occupancy and optimise profitability enabling us to resume paying an attractive dividend. For 2022 we are targeting a 2.5p dividend. - We will continue to engage closely with all shareholders.	E1, E2, E3, E4, E5, I1, I2, I3, I4

KPI Links

A. Rebooker Rate

B. Net Promoter Score

C. Revenue Occupancy

D. Safety - Number of Accidents

E. Colleague Engagement

F. Gross Margin

G. Adjusted Earnings per Share

H. Dividend Cover

I. Net Asset Value per Share

J. Total Return

Risks Links

External Risks

E1. Revenue Risk

E2. Competition Risk

E3. Property Market Risk

E4. Regulatory Risk

E5. Funding Risk

Internal Risks

I1. Health and Safety Risk

I2. Cyber Security Risk

I3. People Risk

I4. Safe and Sustainable Buildings Risk

Strategy in Action

CUSTOMERS

Caring for our customers

Delivering Consistently High Customer Service

The Group undertakes a biannual survey with the Global Student Living Index. The outcome in Q4 was a Net Promoter Score ("NPS") of +22 - slightly lower than Spring 2021 (+27) but in line with Autumn last year (+21).

82% rated their accommodation positively, in line with private hall and large operator benchmarks (83%). 70% said their accommodation had a positive impact on their wellbeing, an improvement on Spring and Autumn 2020 (67%). The wellbeing impact score is an encouraging 4% points above the benchmark for UK private halls (66%). 28% said they would be staying in their current accommodation next year, higher than the average for private halls. 77% of students rated their moving-in experience as good or very good, with the highest rating score being the staff welcome. All of these scores were ahead of our peers despite the difficulty COVID-19 has brought.

"Customer service is key to retaining customers and ensuring our brand is spread by word of mouth."

OUR PEOPLE AND OPERATIONS

Supporting our people

Training Our People

Our key focus as a business is providing the best experience for our students. Our people are on the front line of providing that experience and as such any investment in our people means happy customers.

We have a dedicated in-house training resource which specialises in ensuring all our people provide great customer service. These skills stay with our people for a lifetime and so will help them through all stages of their career. Despite the challenges posed by COVID-19 we have delivered 120 hours of sales and customer training to our people.

The impact of this training is clear to see in the reviews our students leave across various platforms. We have selected two examples here out of the many we read.

"Perfect location within a short walk to town, the uni and the beaches. Incredible staff who are on-site most days, no issue is too big or small, there is always someone to help, whether that's a maintenance issue or just for someone to talk to. Best accommodation I've stayed in, this is one of the reasons why I rebooked."

Resident - Ocean View

"Moved in here three months ago and really glad I chose this place. The location couldn't have been better, given the proximity to the city centre as well as uni. The staff is super sweet and friendly, always a delight to chat with, and they've gone above and beyond their duties to ensure our comfort and safety. Barring the ongoing COVID-19 situation, they organise events and socials so I think that's cool. Overall, the facilities and everything about this place has fairly exceeded my expectations so there's no complaints so far. Oh, and the best part? Free coffee in the common room!"

Resident - York Foss Studios

Throughout the pandemic we continued to ensure our training schedule was unaffected, delivering training through video conferences.

CHIEF EXECUTIVE OFFICER'S REVIEW

Delivering our strategic priorities

"We have made good progress executing our strategy through investment in our people, customers, assets and systems, despite the challenges of the pandemic."

Throughout the year, we remained committed to supporting and doing the right thing by each student on a case-by-case basis, focusing on Health and Safety, whilst also protecting the long-term value of the Group, even though 2021 brought further challenging times as the pandemic continued to disrupt many students' education plans.

In March 2021, we identified five key priorities that would drive value for shareholders:

Driving performance to improve shareholder returns

Five Key Priorities

Actively Managing the Property Portfolio

Strengthening our Brand Proposition

Driving Performance through Data Analytics

Delivering Consistent Customer Service

Developing Our People

An overriding focus that spans everything we do is the safety and wellbeing of our colleagues, customers, communities and stakeholders, and we have devoted significant resources to ensure this is the case.

I will expand on this, as we look at the progress of each of these priorities in turn:

Actively Managing the Property Portfolio

As at 31 December 2021, we owned or were committed to owning 91 assets with 9,170 beds (31 December 2020: 95 assets, representing 9,396 beds). Of these, 87 were revenue-generating assets, with 8,543 beds (31 December 2020: 91 were revenue-generating assets, with 8,887 beds).

Portfolio Safety

Safety remains our top priority as a business and to that end we ensure that our buildings comply with not only all relevant regulations but also with best practice within the industry. We have updated our fire risk and mitigation strategies throughout our estate, and where appropriate that includes undertaking detailed External Wall Surveys. Such surveys will ensure any potential risks are clearly identified and are being undertaken by highly experienced professional teams and where necessary qualified experts. Should remedial actions be identified as necessary, these are being addressed. In our interim results, we previously advised that we planned to spend £30 million on fire safety works in our buildings. However, we are uncertain how much we will recover from developers so we have increased this estimate to £37 million.

Independent Valuation

Each property in our portfolio has been independently valued by CBRE, in accordance with the Royal Institution of Chartered Surveyors ("RICS") Valuation - Professional Standards January 2014 (the "Red Book"). At 31 December 2021, the portfolio was valued at £1,022 million, an increase of 2% from prior year (31 December 2020: £1,005 million). See valuation bridge further on which details the breakdown of the fair value movement in the year.

Property Portfolio Management

As described last year, we have undertaken a strategic review of our portfolio, with the aim of rationalising it to maximise the expertise, positive reputation, and commercial power of the Hello Student^® brand. We have made good progress disposing of non-core assets, and to date we have sold £45 million of these, which on aggregate have sold above book value.

This gives us an opportunity for capital recycling, which we will undertake whilst focusing on the best interests of shareholders. This includes consideration of investment in refurbishments or reconfigurations, as we aim to bring the portfolio to a consistently high standard, where we have identified £44 million of refurbishment capex to be spent over five years. This spend will be subject to a hurdle rate of 9-11% IRR. During the year, we completed two pilot refurbishment schemes to upgrade rooms, both of which were successfully completed and achieved target IRR. As a result, we have drawn up plans to roll out the refurbishment programme and will make progress on this in 2022.

"Safety remains our top priority as a business."

Total operational beds

March 2022

8,391

AY 2022/23

8,603

"We help build futures by providing the best and safest buildings, environments and support for our students to study and flourish. We continuously focus on improving our offer."

As a refresher on the portfolio segmentation:

Segment A comprises properties we regard as core Hello Student^® sites. They are in great condition, properly configured and produce our best results. Apart from a continuous programme of ensuring they remain in great condition, there are no further significant actions to take with the existing sites. This segment is targeted for growth through either acquisitions or developments, as described below.

Segment B comprises sites which fundamentally meet the Hello Student^® criteria, but need investment in refurbishment or modest reconfiguration, to upgrade them to core Hello Student^® brand standards, and thus command an improved rental yield. We will invest in these sites, assuming the 9-11% IRRs hurdle rate. The objective is to eliminate this segment over a five-year period.

Segment C comprises sites which are not core Hello Student^® sites for various reasons, but have good commercial characteristics. This segment might also offer interesting opportunities for different ownership models which we will explore further. They can be divided into two subcategories.

The first sub-category comprises sites ideally suited to first-year UK students (who are not core Hello Student^® customers). However, with nomination agreements for these sites, they represent attractive commercial propositions. Should this not be possible for any reason, they could be disposal targets, as has already been identified for one site.

The second sub-category comprises sites that do not fit our core Hello Student^® criteria but are ideal for mature graduates or postgraduates who often look for accommodation in quieter locations, or in city centres, or perhaps something more suitable for couples. In 2022 or 2023 we will be trialling a sub-brand of Hello Student^® aimed at more mature students, enabling us to retain, and "upgrade" existing customers as they continue their further studies, allowing us to benefit from building loyalty through their Hello Student^® experiences.

Segment D comprises properties that currently represent approximately 8% of the value of our portfolio, which for various reasons no longer remain core. The disposal programme has realised £45 million in gross proceeds so far, and we remain confident that the remaining properties will be sold over the course of the next 18 months, after which segment D will no longer exist.

Proceeds from disposal are being deployed in the best interests of shareholders, and a variety of opportunities will be evaluated. This will include reinvestment in new developments, refurbishments or acquisitions to grow our Segment A core Hello Student^® portfolio, especially on a cluster density increase basis.

Developments and Redevelopments

Work is progressing well at St Mary's Hospital in Bristol which will be completed in time to operate for the 2022/23 academic year.

Due to COVID-19 we paused two projects, a development in Canterbury called Franciscans, and a refurbishment in Edinburgh called Southbridge. The latter is now scheduled to begin construction in 2022.

In December 2020 we secured planning permission for the redevelopment of Francis Gardner Apartments in London. The new seven-storey development will provide 18 new bedrooms with a mix of two, three and four-bed flats with shared kitchens and living facilities.

Portfolio Growth Strategy

As we release cash through the disposal programme, reinvestment will take place in two separate ways. Firstly, there is the capex deployment as identified above to bring our existing portfolio to standard, and secondly there is the development or acquisition of new bed stock. We have undertaken a strategic review of growth locations and will invest in growing bed stock in those cities with Russell Group, or closely adjacent to Russell Group Universities, where international student participation is targeted for growth over the next ten years or longer.

Development Pipeline

Site	Development basis	Beds	Delivery year
St Mary's, Bristol	Direct Development	153	2022
Southbridge, Edinburgh	Major refurbishment/development	59	2022
Francis Gardner, London	Major refurbishment/development	72	TBC
FISC, Canterbury	Major refurbishment/development	134	TBC

"University is a time for making new friends, learning new things and having new experiences. Experiences that create memories to last a lifetime. And Hello Student is more than just a home from home, we're basecamp for your next adventure."

We will drive operational efficiencies through acquiring or developing new sites in these cities that are close to well-located existing sites. This clustering strategy delivers the benefits of scale of additional beds, whilst maintaining the personalised service and positioning requirements of being a Hello Student^® property, with that key homely boutique feel.

Strengthening Our Brand Proposition (including Our Sustainability Approach)

It is critical that we enshrine data-driven customer insight into our property and service offerings, and into our designs and development. It should also drive innovation and our marketing and communications strategies. In 2021 we undertook extensive qualitative and quantitative customer research which is informing our plans, especially on executing the digital customer journey where we are working on an overhaul of our website and communications.

Our Hello Student^® brand has good awareness and reputation, and we have used the customer insight to refine its proposition.

Its execution in the various media we use to communicate will be revisited to ensure we have the right reach in the right channels. Our aim is to build further on the strength of our brand within our properties and ensure the Hello Student^® name becomes more prominent within the student accommodation sector.

Our customers mostly belong to the late Millennial or early Generation Z demographic groupings, and as such it is highly important for them to choose service providers who act in a sustainable and responsible way. As such, ESG is not just a corporate requirement for us, it is a customer necessity. We have covered this key area in a major section of this Annual Report on [page X]. Suffice to say it is driven by a wish to inspire colleagues, customers and investors.

Driving Performance through Data Analytics

Our Hello Hub operating platform has given us a complete in-house solution to managing our own revenues. Not only do we have the technical systems in place, with the help of experts in this field we have completely revised our revenue management processes, accountabilities and now systemised our dynamic pricing approach. Algorithms have been written, data management expertise has been brought in-house, and this is being used for the first time to take weekly pricing decisions, enabling us to improve rental yields over time.

As an example, we used our data analytics on a slow to fill city, finding that our room categorisation was too complicated, not understood by potential customers, and as a result they abandoned their search with Hello Student^® and went to competitors. Changes were made to simplify room types and their digital route to market, and within two weeks this city grew their occupancy over 50% more than the average occupancy growth across the portfolio.

Dynamic pricing gives us a formalised time-bound process to maximise our revenues on sites that are in high demand, and similarly to maximise occupancy in those slower to fill. Our premium positioning and improvements in quality and customer service will enable us to command better rents. The use of data is now giving us the best possible direct control of room categorisation and price setting, informed by real-time sales and competitor data.

Delivering Consistent Customer Service

Since foundation, the Company has been on a service journey. Until relatively recently, it was largely outsourced with relatively little direct control over its nature, quality or consistency. Operations were fully brought in-house three years ago, and since then we have been building the people management expertise, and now it is time to really drive a service culture and put customer experience at the heart of what we deliver.

In 2021 we changed our working patterns and introduced 24-hour service at our sites, improving safety and security and customer engagement. Our reception desks are now manned when our customers most need to talk to us, not just "9-5". We have our own maintenance team, shared between clusters of sites, so that we can quickly and cost effectively complete repairs and only call in experts when more complex maintenance is required.

Service requirements and standards are set through researched customer insight and are measured through satisfaction surveys. In 2021 extensive customer insight has been gathered in order to determine the most important elements, and we have joined the Global Student Living Index in order to benchmark our performance against others. Through this, we get a Net Promoter Score ("NPS") twice yearly, where we can benchmark progress, areas of shortfall that need addressing, and understand our competitive position.

The most recent result gave us an NPS of +22 which has grown 1 point over the last 12 months, and compares to an all-sector average of -8 and a private halls average of +20. This means we are 2 points above the average for our comparator group competitors, which we need to be in order to earn our premium positioning.

24hr

service at our sites

NPS

+22

against PBSA Private halls average of +20

Colleague Engagement Score

82%

(2020: 83%)

Understanding our customers' growing needs is critical to maintaining competitive edge, and delivering a consistent experience remains the challenge. We also understand that knowing our residents' families, especially their parents, is a key part of reassurance that makes the Hello Student^® experience different from those in halls of residence or HMOs.

Supporting Our Customers

During 2021 we have provided a Student Assistance Programme in partnership with Endsleigh and Health Assured. This scheme provides a suite of wellbeing services for our customers, offering them support to deal with physical and mental health issues or financial difficulties. The provision of this scheme has also supported some universities that have faced challenges in providing sufficient wellbeing support to their students throughout the pandemic and this will not just be in place during COVID-19 times but a permanent enhancement of our student wellbeing support.

In addition, we have invested in Mental Health First Aid training for all of our key colleagues, in partnership with MHFA England. Whilst we do not profess to be medical experts, our team are now equipped to identify potential issues and assist students to get the professional support they require, particularly at times of stress such as examinations.

Developing our People

At the heart of any service business are the people that design, support and deliver the customer experience. It has been a key priority in 2021, and will remain so, to invest in our people to ensure we remain at the competitive leading edge providing premium experiences.

Health and Safety

Health and safety is of paramount importance to the Group. We have a legal and moral responsibility to ensure that everyone who is living, working in or visiting our buildings is kept safe. Our customer insight shows it is the number one priority, by some margin, for our students.

In particular, we have focused on fire safety, ensuring that we are ahead of any legislative changes and that we have risk assessments, qualified surveys, mitigation procedures, checking processes and we invest in prevention and mitigation. To this end, we have allocated £37 million capex over the next five years, to undertake any building changes required.

Our buildings are inspected on a regular basis to ensure that we identify and eliminate hazards. To assess the buildings we have engaged with specialist consultants to undertake thorough assessments of general safety, hazards, fire risks and prevention and water systems and treatment against Legionella.

During 2021 we have undertaken extensive formal health and safety training by the Institute of Occupational Safety and Health ("IOSH") for our teams, from the Board to the front line.

We have delivered a series of Toolbox Talks which are in document and e-learning format enabling all site teams to have continual access to training.

A Health & Safety Forum has been implemented during 2021 which includes representatives from teams throughout the country.

Investments in People

In January 2020, we appointed a Training & Development Manager to design and deliver programmes to our people for their personal and professional growth, which range from mandatory training for governance to selling and practical skills. We have further enhanced this, with the engagement of an experienced performance improvement coach who is helping the leadership team to improve effectiveness.

We overhauled our e-learning platform and provided support for new learning opportunities to various roles within the business. This change in emphasis from classroom to online webinar delivery has been efficient, especially during restrictions from the pandemic, and we have continued to focus on key sessions such as sales and customer services to increase the knowledge and skills of our operational teams.

We increased focus on mandatory training with new measures to track compliance levels and ensure high standards are being achieved. In 2022 we will enhance the skills of colleagues within our maintenance teams. This will allow for cost efficiencies as a broader range of repairs and maintenance works can be conducted in-house, and will also develop the network of our regional teams so they are able to support each other across the country.

We recognised the contribution that our front-line operational teams have made to our customers and the business and in 2021, we increased pay to align with the Real Living Wage as our minimum, and we are committed to pay a fair wage for all core roles. We have accreditation from the Real Living Wage Foundation and have undertaken to uphold those standards for years to come.

As in previous years, we have undertaken a colleague engagement survey which achieved a response rate of 64% and an overall colleague engagement score of 82% against the UK all-sector average of 68% and previous year's result of 83%. These results were delivered despite the current pandemic and help to give us a better understanding of what matters to our people and to ensure we deliver improvements.

To provide a higher quality, consistent 24/7 personalised service, we need the right calibre of people, appropriately rewarded, who are trained and developed. That process is underway and we have already made changes to our site management structure and invested in quality colleagues to reduce turnover and increase our service engagement. To deliver a personalised homely service we need our front-line colleagues to be in their positions for a long time to develop those critical customer relationships, so measuring turnover and retention will be key.

We will put more focus and resources into developing our people, with an aim of significantly raising the proportion of internal promotions versus external recruitment.

STRATEGY IN ACTION

Buildings

Refurbishing our key assets

Summer Refurbishments

Leeds Pennine House & Bristol College Green

In the summer of 2021, we undertook the first stage of our refurbishment programme. This consisted of a refurbishment of 37 beds across two buildings and a refreshing of our communal areas in Leeds. These refurbishments were completed over the summer while students were still in situ within the building with no disruption. The total project cost was £1.5 million with a number of works undertaken which will ensure the second phase of renovations in these buildings can be completed at a lower cost. The studio suites have been adapted and fully upgraded to include new kitchen, study, bedspace and extended storage facilities. Bathrooms were refreshed including new shower enclosures, equipment and accessories. All works were carried out to a market-leading standard.

"All refurbished rooms are 100% occupied for the 2021/22 academic year."

28% rental uplift achieved on the newly refurbished rooms

Developing Our People

Introducing our new values

We have redefined and relaunched our values from the grassroots up.

On 1 July 2021 we relaunched our values; in developing our values we started with interactive colleague workshops, mainly as face-to-face sessions, delivered at locations across the UK.

Where this was not possible we also ran some virtual sessions meaning everyone had the opportunity to contribute their ideas. This ranged from colleagues to customers who all had an opportunity to feed into our values. The outputs were then put to the Colleague Forum who reviewed them and came up with the anacronym HOMES. The final values were then shared across the business and were met with very positive sentiment.

Our new values

Honest

We value transparency and integrity in our words and actions.

One

We work as one team to develop safe, friendly and inclusive communities for our customers and colleagues.

Memorable

We create positive experiences and lifelong memories.

Equals

We welcome individual differences and support each other with the same amount of respect and kindness.

Successful

We provide high-quality services that deliver results now and for the future.

Value in Action

One

We believe that we are all truly one equal team where we want to work hard to ensure we develop safe, friendly and inclusive communities for our customers. We ensure all people managers in the Group have undertaken mental health first aid training and that colleagues endeavour to respond to customers as soon as they can. This value stretches throughout the organisation and helps underpin everything else that we do.

Value in Action

Equal

We believe and support everyone from all backgrounds. For the first time in 2021 we started an exercise to understand the ethnicity of our workforce and how we could ensure that we continue to be a welcoming business.

We have also continued our obligations to report under the gender pay gap. For another year our gender pay gap is actually negative, which means that on average within our businesswomen are paid more than men. We want to ensure that we are always an equal employer but also always ensure we welcome people from all backgrounds in our buildings as well.

KEY PERFORMANCE INDICATORS

Monitoring our performance

Non-Financial KPIs

	A Rebooker Rate (%) 16%	B Net Promoter Score +22
Performance	2021: 16% 2020: 23%	2021: 22.0 2020: 21.0
Purpose	The rebooker rate demonstrates our ability to retain customers within the Hello Student^® brand, which is an indicator of the quality of service we provide.	NPS calculated by the Global Student Living Index which also allows us to benchmark against our peers.
Strategic Link	1 2 3 4 5	1 2 3 4 5

	C Revenue Occupancy (%) 84%	D Safety - Number of Accidents 0
Performance	2021/22 (as at end February 2022): 84% 2020/21 (as at end February 2021): 65%	2021: 0 20220: 0
Purpose	Occupancy is a key driver of our revenue and demonstrates the quality and location of our assets, the strength of our sales process and our ability to set appropriate rents.	The number of reportable accidents throughout the Group each year. This is a key reporting metric to the Health & Safety Executive as well as a measure of our health and safety strategy and procedures.
Strategic Link	1 2 3 4 5	1 2 3 4 5

	E Colleague Engagement 82%
Performance	2021: 82% 2020: 83%
Purpose	Colleague engagement scores provide an insight into the happiness of our people across a range of topics regarding their working environment.
Strategic Link	1 2 3 4 5

Our key performance indicators ("KPIs") are central to how we run our business and allow us to drive the performance of the business for our shareholders. Due to the impact of COVID-19 during this and the previous year, several of our usual KPIs are showing anomalous figures during this reporting period. We expect this impact to carry forward into our 2022 KPI reporting.

During the year we have amended our customer-related KPIs, we have moved from a customer happiness score, which was internally measured, to a NPS score calculated by the Global Student Living Index which also allows us to benchmark against our peers.

In 2022 we will review our KPIs to ensure our ESG agenda is appropriately reflected.

Our KPIs are defined in the Definitions.

Financial KPIs

	F Gross Margin (%) 58.8%	G Adjusted Earnings per Share (p) 1.65p
Performance	2021: 58.8% 2020: 61.9%	2021: 1.65 2020: 2.30
Purpose	The gross margin reflects our ability to drive occupancy and to rigorously control our operating costs.	Adjusted earnings per share is the earnings measure that best demonstrates our ability to reward shareholders through dividends.
Strategic Link	1 2 3 4 5	1 2 3 4 5

	H Dividend Cover (%) 66.0%	I Net Asset Value per Share (p) 107.36p
Performance	2021: 66.0% 2020: 183.8%	2021: 107.36 2020: 105.00
Purpose	Dividend cover shows our ability to pay dividends out of current year earnings. Note that in the past two years dividends were suspended. See [page 31] for details.	Movement in the NAV per share reflects the quality of our assets and our ability to generate revenue from them.
Strategic Link	1 2 3 4 5	1 2 3 4 5

	J Total Return (%) 4.6%
Performance	2021: 4.6% 2020: (3.6)%
Purpose	The Total Return shows the aggregate value (lost)/gained for shareholders, through both capital (decline)/growth of NAV and dividends.
Strategic Link	1 2 3 4 5

Strategic Links

1. Customers

2. Brand

3. People and Operations

4. Buildings

5. Shareholders

DUNCAN GARROOD

Chief Executive Officer

2 March 2022

CFO AND CSO STATEMENT

Driving efficiencies

"We have had a busy year, embedding new systems and change so that we have a strong platform for growth."

2021 has seen us complete what can be viewed as the first phase of our operational transformation which we started in 2018, with all activities now safely migrated in-house. The key final milestone this year was the previous external revenue management contract ending in October 2021 with the academic year 2020/21 being the final one externally managed. In November 2020 we had already started selling for the academic year 2021/22 on our in-house platform for the first time, and throughout 2021 we have now also successfully taken payments directly from students for the first time.

This first phase of the transformation journey has been a significant undertaking, and I would like to thank the entire team for their contribution in making this happen.

The next phase of our transformation will see us focus on continuing to drive performance and efficiency across the business, with the key areas of operational focus in this respect in 2021 having been:

- Completed the induction and establishment in the senior team of the CEO and Head of Property Director, who both joined towards the end of the previous financial year, and for the Sales & Marketing Director who joined in June 2021.

- Embedding the day-to-day management of the in-house revenue management platform and the related dynamic pricing model.

- Re-structuring of the IT team and the development of a small project office to assist in the further rationalisation of our IT platforms and automation of processes.

- An external review of cyber security and IT enterprise architecture.

Revenue Management System

The final work on our new revenue management system concluded in October when we brought the process for the collection of Receivables in-house. This is now a centralised function within the finance team.

This system gives us direct control of our revenue management, enabling us to make price changes more efficiently and swiftly:

· it allows us to manage the relationship with our customers directly end to end;

· it makes debt collection easier, and importantly we are delivering annualised cost savings of £1.5 million which started in September.

Financial Performance

Our performance in 2021 continued to be impacted by COVID-19 but there was an improvement as restrictions relaxed during the year and despite the Omicron surge in December we ended the year with greater confidence that market conditions are starting to normalise for academic year 2022/23.

Revenue decreased 6% to £56.0 million, as occupancy for the first eight months in 2021 was 65% compared to 84% for the same period in 2020. We started the academic year 2021/22 at 81% occupancy and this has increased to 84% since then.

Like for Like rental growth for the 2020/21 academic year was 1.3% as reported previously, as we prioritised occupancy levels over rental growth.

Property Expenses were up 2% mainly driven by having to pay council tax on empty rooms as a result of lower occupancy levels.

Gross Margin decreased from 62% to 59% as a result of a £3.5 million fall in revenue.

During the period we sold four assets with a net gain on disposal of £1.7 million.

Since the year end you will have seen that we have announced further disposals of five assets also above book value alongside one acquisition. These have been reported on as assets held for sale as at the balance sheet date.

The net profit from a change in the fair value of investment properties was £17.6 million compared to a £37.6 million loss the previous year.

Net finance expense was £12.4 million, 7% less than last year due to maintaining the RCF at a lower level and continued low interest rates.

The result of this is a profit before tax of £29.2 million, (2020: loss £24.0 million). No corporation tax was charged, as the Group fulfilled all of its obligations as a UK Real Estate Investment Trust ("REIT"). Basic earnings per share ("EPS") was therefore 4.84 pence and also 4.84 pence on a diluted basis (2020: loss (3.97) pence and (3.97) pence (diluted).

Adjusted EPS is the most relevant measure of earnings when assessing dividend distributions.

In 2021 Adjusted EPS was 1.65 pence (2020: 2.30). This shows that the underlying operating business is continuing to generate cash despite the impact of the pandemic.

The Net Asset Value ("NAV") per share as at 31 December 2021 was 107.36 pence, (31 December 2020: 105.00 pence.

The NAV is shown net of all property acquisition costs and dividends paid during the year.

Valuation Movement

During 2021 we sold four assets for £18.1 million, above the book value shown here of £16.3 million. After that disposal the portfolio was valued at £988.8 million.

In August 2021 we indicated we would spend £30 million on health and safety works over the next five years. We are uncertain how much we will recover from developers, so we have increased this to £37 million. CBRE accepted management's assumption is that £17.2 million of this cost should now be reflected in the valuation at the year-end in respect of in respect of work on fire stopping and external wall systems.

The value of developments has fallen by £2.5 million due to a delay in obtaining planning consent on Canterbury.

At the end of December 20, we reported a COVID-19 related reduction in the year end portfolio valuation of £21.4 million mainly due to CBRE's assumption of 50% occupancy for the balance of the academic year.

We are now reporting a £15.2 million move in our favour as CBRE reduced their COVID-19 deduction to £6.2 million. This deduction of £6.2 million relates to the balance of the 2021/22 academic year only, with no deduction proposed for the academic year 2022/23.

During the year we spent £8.0 million on capital expenditure and £7.4 million on development.

Our operational assets increased in value by £21.3 million, driven by improved rental growth on our super prime assets, partially offset by a reduction in secondary assets.

Our commercial portfolio, which comprises convenience stores and restaurants within our sites, went up £0.8 million.

The valuation at the end of December, before adjusting for assets that have been sold following the year end, was £1.022 billion.

Over the year Net Initial Yield has slightly improved from 5.6% to 5.3%.

Dividends

The dividends declared in respect of the 2021 financial year are shown in the table.

We are pleased to report that we resumed dividend payments in Q4 2021 with a payment of 2.5p per share. This comprises the PID distribution requirement of 1p per share for the financial year 2019 and 1.5p per share for 2020. In 2022, we plan to start paying a minimum dividend of 2.5p per share per annum, with a view to increasing this as occupancy levels normalise.

Our future dividend policy will be progressive, whilst also ensuring that dividends are paid on a fully covered basis. Driving long-term shareholder value remains top of our agenda as we drive value-enhancing changes in our business.

Quarter ending	Declared	Paid	Amount (p)
30 September 2021	29 October 2021	3 December 2021	2.50

Debt

At the year end, before deduction of loan arrangement fees, the Group had committed investment debt facilities of £420 million, of which £375 million were drawn down (2020: £390 million drawn down).

Of our drawn investment debt, £277 million of this debt is fixed and £98 million is floating. The aggregate cost of our investment debt was 3.0%, with a weighted average term of 4.9 years.

The Loan to Value for the Group was 33.1% (2020: 35.4%), broadly in line with our long-term LTV target of 35%.

We have also agreed waivers or an easing of covenant requirements on all our debt to ensure that we remain covenant compliant throughout the pandemic.

We currently have around £44 million of unencumbered assets and as at the year end we had £82 million of undrawn investment facilities and cash.

We have one facility which is due in less than one year. The facility totals £90million of which £45million was drawn at the end of the year. Post year end we have signed an extension for a further three years. Once completed we expect to have no further financing requirements until March 2023.

RESPONSIBLE BUSINESS - ESG

Responsible and sustainable approach

The Board believes that ESG must be fully embedded within all activities within the Group for it to succeed.

Our ESG Journey and Commitment to Stakeholders

We are committed to creating and operating a responsible and sustainable business which has a positive impact on all of our stakeholders. During 2020 we established a Board level ESG Committee tasked with providing a roadmap to deliver a significant step change in our approach to ESG.

Our purpose is to help students make the most of their university life by providing safe and modern living spaces with service that makes them feel at home.

In 2021 the ESG Committee undertook our first formal materiality assessment. The decision to undertake a materiality assessment was driven by a number of considerations. Firstly, a materiality assessment would help inform the Group's future sustainability strategy. It would allow the Group to identify what organisational changes would be required and, what tools, resources or investment would be needed to implement a robust ESG strategy. Importantly, a materiality assessment would enable the Group to prioritise what the business can or should do to support its key stakeholders whilst communicating this both internally and externally. Finally, completing a materiality assessment would allow the Group to rationalise to key stakeholders why it was prioritising certain topics within its future sustainability strategy and disclosure.

Materiality Matrix

The assessment, led by our Board and ESG Committee, was undertaken by an independent third party to ensure confidentiality and impartiality. The assessment was conducted according to the Global Reporting Initiative ("GRI") and its reporting standards.

To ensure that we fully understood the priorities and needs of our stakeholders, we:

- Listened to over 1,700 students to better understand our customers' needs and expectations.

- Undertook a range of surveys and focus groups with our colleagues.

- Conducted one-to-one interviews with other stakeholders, such as investors, banks, professional advisers and analysts.

Following the assessments above, our external adviser analysed and assessed qualitative information to determine the key topics identified by stakeholders, with the output of the materiality matrix detailed opposite.

The ESG Committee reviewed the materiality matrix and decided to combine the "energy efficiency & consumption" and "Sustainable properties" topics under one heading. The Committee also decided to add a fourth topic around how Empiric aims to provide opportunities for all through its business activities.

We have structured our Responsible Business section so that we have an individual section for each of our four key topics:

- Becoming a sustainable business andachieving net zero

- Excelling in providing health and safety

- Enhancing mental health & wellbeing

- Providing opportunities for all

We are committed to improving our contribution to the environment, our social obligations to employees, suppliers, customers and the communities in which we operate. Our activities will be guided by setting ambitious and challenging targets that will guide our strategy, operations and employees over the coming years.

ESG

Management Framework

ESG Committee

The Committee will oversee…

the creation of overall ESG strategy for the Group, ensuring that there is Board level discussion and input.

The Board

The Board has overall responsibility for…

the Group's ESG strategy and the direction which the Group will take.

Senior Leadership Team

Senior management are responsible for…

ensuring this ESG strategy is embedded throughout the business and providing key support to communities.

Our People

The successful delivery of an ESG strategy across our business will require the collaboration and support of all our people.

Becoming a sustainable business and achieving net zero

We intend to become net zero in our operations, property portfolio and energy consumption by 2035 or before. We will reduce the environmental impact of the buildings annually as part of a strategy through investment in energy and resource efficiencies and encourage our students to increase their sustainable behaviour. We have also set a wider target of being net zero in all our emissions (adding scope 3) by 2050 or sooner.

Actions Undertaken During 2021

As part of our ambition to achieve net zero we have appointed CBRE to undertake an overarching Net Zero report, this will help us to define KPIs and also areas in which we need stronger governance. As part of this report, there will be a section that we publish on our website under a new ESG section.

We have also commissioned our utilities adviser to build an asset-by-asset roadmap of our existing portfolio. This will contain yearly targets and activities and highlight to us where best to invest our capital. As part of this project, in our June 2021 Interim Report we announced that we had ringfenced £4 million of green expenditure over the next five years to help achieve these goals.

In December 2021 we undertook our first pilot green initiative in Manchester on two assets. This project involved the installation of new panel heaters in the building which were then connected to our heating network. This project will pay for itself in energy savings over a period of less than two years. This pilot initiative was completed without any disturbance to our customers and has helped design the blueprint for future initiatives.

During 2021 we also replaced all of our on-site vans with electric vehicles; see case study for more detail. These vans can then be charged on-site where the electricity we use in our buildings is 100% renewable. This is backed by UK-based renewable generation certificates administered by Ofgem. This means the electricity we use is generated in renewable ways ranging from solar and wind turbines to anaerobic digestion and biomass plants.

Finally in 2021 we signed up to become a supporter of the TCFD. This is our first year in complying with disclosures in line with TCFD recommendations. We expect these disclosures to evolve as we start to define our pathway to net zero carbon and will become fully compliant in the future.

Key Aims for 2022

- Disclosure of our EPC position across the Group and steps being taken to improve this.

- Continue our roadmap of planned energy efficiency initiatives across the portfolio.

- Increase the ESG disclosures on our corporate website to increase transparency.

- Publish CBRE's Net Zero report on our website.

Electric Vans: case study

During 2021 the lease on our six diesel work vans came up for renewal and the decision was quickly made to replace these with green electric work vans. Although this came at a slight premium, it was an important message to make to underline our commitment to ESG. As part of the project we installed electric charging stations at six buildings and were able to utilise our renewable electricity. Our people and students reacted very positively to the roll out of the new electric vans with posts being made on Workplace, our internal social media site.

Excelling in Providing Health and Safety

We will continue to build on our established good practice in Health and Safety where we operate. We will do this by continuing to target zero RIDDORs each year as defined by the HSE. We also understand the need to create environments that make our students and employees feel safe. Needing to feel safe always scores highly in our customer surveys and we have a duty to address that.

Actions Undertaken During 2021

In our 2021 Interim Report we announced that we would be spending circa £30 million on fire safety works in our buildings. However, we are uncertain how much we will recover from developers so we have increased this estimate to £37 million.

This workstream was split into two sections. The first part includes fire compartmentation works, where we undertook works on 29 buildings in 2021, with a further 30 buildings planned for 2022 and 2023. The second part of the workstream was external wall system ("EWS") surveys. We undertook EWS surveys on our 20 buildings which were classed as high-risk due to their height being over 18 metres. The actions are currently being worked through by our property team.

Keeping our people and customers safe is always of paramount importance to us. We have continued to maintain a number of initiatives within our buildings to ensure safety during the COVID-19 pandemic, and we have also been agile and amended these safety measures in line with government guidance.

We undertook a large training programme with the Institute of Occupational Safety and Health during the year; see case study for detail. One outcome of this training was the decision to review and relaunch our existing health and safety policy to ensure it was up to date and relevant. This was relaunched in October 2021 alongside a secondary document which gives guidance on the key aspects of the policy document which are pertinent to each job role.

Key Aims for 2022

- We have hired a full-time in-house Health and Safety expert to increase the resource and knowledge with the business. We also want an internal expert to help us facilitate and embed a culture change throughout the business.

- Define and establish KPIs for external reporting around Colleague Engagement, Training, Incident Reporting and Student Feedback.

- Continue to undertake the capital expenditure on our fire safety projects.

IOSH Training: case study

During the year we undertook a number of training courses with IOSH. There were two main streams of training, firstly the frontline IOSH training programme. This consisted of three separate courses: Managing Safely, Working Safely and Fire Safety. This was delivered as a hybrid of in-person and online teaching to our people. We had 120 of our front line people complete the course and the feedback we had was overwhelmingly positive.

The second stream of training was the IOSH Leading Safely course. This was a full day in -person course delivered to three Board members and three Executive Committee members. Each attendee made a number of key safety commitments which will be woven into our health and safety strategy.

Enhancing Mental Health & Wellbeing

The wellbeing and mental health of our students and employees is a top priority for us. We also know how it can make a positive impact on our business and the wider community.

Actions Undertaken During 2021

During 2021 we undertook a number of different actions to enhance the mental health and wellbeing for both Colleagues and our Customers. One of the key actions undertaken was mental health training undertaken with Mental Health First Aid England, discussed further in our case study.

We launched a series of awareness and wellbeing weeks across the business. In May we had our Mental Health Awareness Week with the theme of nature; we encouraged colleagues to get outdoors and share their pictures on a new ESG workgroup on Workplace and used the opportunity to remind everyone how to access support to improve their wellbeing and mental health. In October we launched a series of wellbeing weeks, where we featured a different aspect of wellbeing each week, encouraging managers to engage their team members in discussions that will increase awareness about the support tools we offer and demonstrate that we care about the health and wellbeing of our people.

We also launched a "How are you Feeling?" survey undertaken by our London office-based colleagues following extended period of remote working and an announcement of a planned office move to London Bridge later in the year. The survey results indicated a strong preference for "hybrid working" to become the new norm. A working party was set up to further review and respond to the results, combined with communication updates for the new office.

We launched a further round of refunds and discounts to help our customers who had been impacted by the COVID-19 pandemic. One of the main considerations around offering the refunds was the impact of stress on our customers' mental health.

In 2021 we have continued in partnership with Endsleigh, a student assistance programme. This programme provides our customers with unlimited access to a 24/7 mental health and confidential counselling service (BACP accredited) through a telephone helpline. We believe supporting our customers' wellbeing is paramount.

Key Aims for 2022

- Improve our Best Companies score as well as our student satisfaction score.

- Define and develop how we evaluate our approach to the wellbeing of all our stakeholders before being able to set out, define and establish KPIs.

Mental Health & Wellbeing Training: case study

We partnered with Mental Health First Aid England ("MHFA") to deliver training to all people managers to improve their knowledge, awareness and understanding in supporting both team members and students. Separate shorter sessions were also delivered for key frontline roles, Customer Service Advisers and Night Caretakers initially. This meant that everyone from our CEO to our front-line staff had undertaken some form of mental health first aid training to ensure we can help protect our customers and our people as well as ourselves. We want to continue to progress this training in future years with regular top-up sessions and forum discussions.

Providing Opportunities For All

We believe that being inclusive improves opportunities for our students, employees and people living in the communities we operate in. This will not only create long-term value to our business, but also society.

Actions Undertaken During 2021

Our first action in 2021 was to become a Living Wage Employer from 1 January 2021. We are committed to ensuring that we continue to hold this accreditation as we strongly believe our people should be fairly rewarded.

We have introduced two new KPIs around our people. Firstly, a mandatory training KPI established for monthly tracking and reporting. This has shown a 44% increase in the year. Secondly, a new KPI to track internal promotions into eligible roles, this is currently running at 23%, meaning that just over one in five roles advertised are filled internally by promotion.

To help assist internal promotions we have launched a skills matrix for maintenance operatives and day/night caretakers. This self-assessment allows us to gauge current levels of ability and confidence to complete certain tasks. It also highlights areas where we will develop a training plan to increase capability and reduce external spend as well as upskilling our people. This allows our people to work as one team and to treat others as equals. These feed into our Values as a business which we relaunched in the year; see the case study for more detail.

Key Aims for 2022

- Continue to support and help local causes in our communities.

- Undertake a review looking into wider diversity issues and targets.

Gender Diversity

Board

2021: Male 4 / Female 2

2020: Male 4 / Female 2

Executive Committee

2021: Male 4 / Female 2

2020: Male 4 / Female 2

Other Employees

2021: Male 151 / Female 138

2020: Male 162 / Female 154

Total

2021: Male 155 / Female 140

2020: Male 166 / Female 158

Equality, Diversity and Inclusion

Group employees are committed to promoting an inclusive, positive and collaborative culture. We treat everyone equally irrespective of age, sex, sexual orientation, race, colour, nationality, ethnic origin, religion, religious or other philosophical belief, disability, gender identity, gender reassignment, marital or civil partner status, or pregnancy or maternity.

We continue to review our approach to diversity, equality and inclusion, including the use of targets. Our workforce and customers are from a diverse range of people so we need to ensure that our workplace remains inclusive and allows our people and our customers a place where they can thrive.

Modern Slavery

Protecting human rights and preventing modern slavery is important to us. We are fundamentally opposed to slavery and committed to understanding the risk of it and ensuring it does not occur anywhere within our business or supply chain.

Our most significant risk area in relation to slavery and human trafficking is in our supply chain, particularly in connection with the sourcing by suppliers of construction material, certain goods and the provision of manual labour in property development and management services.

While nearly all our direct suppliers are based in the UK, some of these suppliers source some materials from around the world.

As part of our broader initiative to identify and mitigate risk in our supply chain, we have updated our consideration of factors such as:

- reviewing our current contractors and suppliers, particularly in relation to supply chain, with a view to developing preferred supplier list arrangements based on robust selection;

- centralising more contracts as a core part of our supplier management strategy;

- strengthening our compliance review processes within procurement practices;

- developing strong relationships with UK-based suppliers and contractors that align to our business code of conduct expectations; and

- ensuring systems are in place to encourage the reporting of concerns and the protection of whistle-blowers in our supply chain.

We believe there is minimal risk of slavery and human trafficking in our colleague base. We continue to review this risk assessment and monitor our activity as part of our broader approach to ensuring we are a responsible and sustainable business.

For our full statement please refer to www.hellostudent.co.uk

Ethical Business

We are committed to carrying out business fairly, honestly and openly. Our anti-bribery policy mandates a zero-tolerance approach, which all our people must read and consent to, both during their induction and when any updates are made to the policy. We require employees to take regular compliance training and to certify each year that they have complied with our policies.

Our people are important to our business maintaining the highest standards of honesty, openness and accountability. Our whistleblowing policy explains how our people can report a whistleblowing concern and reassures them that any such disclosure is made in full confidence. The Board monitors and reviews the policy on at least an annual basis to ensure it complies with UK legislation. There were no incidents of whistleblowing during the year. In 2022 we are going to seek to develop an externally managed whistleblowing hotline as well as reviewing the policy.

Opportunities For All: case study

We also look to provide opportunities for all in our wider community. During the year the BBC undertook filming at one of our buildings and as payment we requested they make a donation to a charity on our behalf. The local site team chose Kind in Liverpool a charity which focuses on helping disadvantaged children and families from across Liverpool and Merseyside. The image here shows the filming outside our Hahneman Building.

Our key stakeholders and how we engage with them

This section provides more information on the various stakeholder engagement activities and our future plans. Please refer to the section 172 ("s.172") statement for more detail on the Board's engagement with our key stakeholders.

Stakeholder Engagement

Stakeholder	Why We Engage	How We Engage	Material Issues	Actions Taken in 2021
Customers	The needs of our customers inspire our brand and provide insightful feedback on how we can improve our service offering to them and better fulfil our purpose. We have a responsibility to provide our customers with a safe place to live and to care for their wellbeing, which is critical to the Board's strategic decision-making and our review of any operational changes.	On a day-to-day basis within our buildings. Through biannual customer surveys. Through our social media presence. Through building relationships with universities in the towns and cities which we operate in.	- Safety in their homes - Customer service - Value for money	- Offered refunds to students impacted by COVID-19 pandemic in Q1 2021. - Moved our student assistance programme onto a student app. - Embedded our new operational structure meaning there was cover on sites 24 hours a day, 7 days a week.
People	Our people are vital to the successful delivery of our business performance. We have a responsibility to provide our people with a safe place to work and to care for their wellbeing to enable them to prosper. The tone and culture of our organisation comes alive through the actions of our people.	On a day-to-day basis we use Workplace as an internal communication tool. Quarterly townhalls are held where our people can raise questions and contribute. Through the Colleague Forum.	- Safety at work - Pay and reward - Fair and equal treatment - Communication	- Relaunched our Company values after a consultation with our people. - Rated as "One to Watch" by the Best Companies survey. - Becoming a Real Living Wage Employer from January 2021.
Communities	Our communities help us to fulfil our purpose of enhancing the university experience for our customers. The Board aims to understand the local markets in which we operate and the key issues we face which assists its decision-making around new opportunities through which we can contribute to our local communities.	Through on-site communication with members of the public and local communities. We have membership with the British Property Federation where we can interact with communities and government on a wider basis. We also have interaction with communities through the property licensing disclosures we have to undertake.	- Job creation - Housing stock - Supporting local charities	- Supported a number of local charities and donated items to the British Heart Foundation. - Had filming at a number of our sites.
Shareholders	Our shareholders are key stakeholders in our business. The Board has a responsibility and desire to communicate key matters relating to the Group openly and honestly to our shareholders. The Group also has a wider responsibility to shareholders to enhance the value of the business and fulfil its purpose ethically.	Through face-to-face meetings with investors. Through our Annual and Interim Report. At our Annual General Meeting.	- ESG reporting and disclosure - Sustainable business - Financial results - Dividend payments	- Undertook a materiality assessment to help develop our ESG strategy. - Resumption of paying dividends to shareholders. - Protecting the business and ensuring its long-term sustainability and going concern.
Environment	Our environment is fundamental to our future. We have a duty to operate our business in an efficient way, giving specific regard to the impact of our operations on the environment and utilising methods throughout our properties (both development and operational sites) that mitigate the risk of environmental damage.	On an annual basis there is detailed ESG reporting within our Annual Report. We are looking to increase the level of reporting and policies available on our website.	- Reduction in greenhouse gas emissions - Sustainable business	- Replacing all of our diesel vans with electric vans. - Undertaking an energy efficiency project in Manchester, the first of our five-year programme.

Task Force on Climate-related Financial Disclosures ("TCFD")

We're committed to implementing the recommendations of the Task Force on Climate- related Financial Disclosures. In 2021 we signed up to become an official supporter of the TCFD.

Area

Disclosure

Governance

a) Describe the Board's oversight of climate-related risks and opportunities.

b) Describe management's role in assessing and managing climate-related risks and opportunities.

a) The Board is ultimately responsible for risk management including the consideration of climate-related risks, though this responsibility is delegated to the Audit and Risk Committee.

b) Our ESG Committee will continue to meet regularly to ensure Board oversight of ESG risks and opportunities. This includes the development of a detailed ESG roadmap as well as KPIs and targets.

Strategy

a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.

b) Describe the impact of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning.

c) Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

a) We have undertaken an initial review of the climate-related risks over the short, medium and long-term as set out below. We will identify risks and opportunities on a continual basis. Short-term (0-5 years): We expect stricter legislation as the UK Government aims to reach its net carbon neutral target. This includes greater disclosure requirements as well as implementation of new Minimum Energy Efficiency Standards for rented property. Medium-term (5-10 years): Customer choice will become more environmentally driven, with higher demand for efficient low-carbon footprint buildings.

Long-term (15+ years): Climate change in the UK will bring more extreme weather conditions which our buildings will have to be able to withstand and thrive in.

b) The Board will ensure that climate risks and ESG factors are included as key metrics when we undertake our portfolio reviews to see where we wish to either divest or invest further capital in green energy efficiency initiatives. We will also consider the climate-related risks and energy efficiency on all acquisitions. See [page xx] for work being undertaken on energy efficiency initiatives.

c) We do not currently comply with this. We will in the near future undertake an analysis into the resilience of the organisation's strategy. We do not foresee that our current strategy will change.

Risk management

a) Describe the organisation's processes for identifying and assessing climate-related risks.

b) Describe the organisation's processes for managing climate-related risks.

c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management.

a) The Board and Audit and Risk Committee formally review the Group's principal risks on a biannual basis. This includes climate-related risks, including their likelihood, impact and mitigating controls.

b&c) The Board recognises that climate change is an increasingly important priority and is one of our top emerging risks. Our risk matrix is regularly reviewed and updated to keep track of the changing nature of these risks.

Metrics and targets

a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.

b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas ("GHG") emissions, and the related risks.

c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.

a,b&c) We do not currently fully comply with this. As we develop our ESG strategy and our climate-related risk management we will publish further metrics in this area and announce targets for these.

We disclose Scope 1 and 2 greenhouse gas ("GHG") emissions in our Annual Report. We are looking to include Scope 3 emissions in the future, once we further develop our ESG reporting. We do not believe Scope 3 emissions will have a material impact on our figures as we should have minimal upstream and downstream emissions.

Energy Usage Data

Energy Usage

Energy usage remains a key focus for our business, reducing usage both through changing how our customers act and also employing capital projects. The key headlines are:

- 8.6% reduction in like-for-like GHG emissions since 2020.

- 0.1% increase in like-for-like electricity consumption since 2020.

- COVID-19 had an impact in the reduction of

GHG and electricity consumption in 2020. Due to the various lockdowns under government guidelines, we expect the consumption to start increasing in line with pre COVID-19 levels going forward.

Water Usage

Our total water usage has decreased marginally since 2020. However, on a normalised basis per bed the usage levels have increased. This is due to more accurate data being available due to the installation of smart meters.

Methodology

We have used the EPRA Best Practices Recommendations on Sustainability Reporting (Third Edition) and GHG Protocol Standard (revised edition), using a financial control organisational boundary to prepare this disclosure. The UK Government Conversion Factors for Company Reporting have been applied to convert energy data into greenhouse gas emissions. Whole building data has been reported and any missing data has been estimated using either direct comparison, pro rata calculation or based on an average consumption value per bed.

Waste Management

All sites currently have recycling facilities that are used by our customers and people. We aim to review our overall waste management arrangement to identify more efficient ways to manage our recycling throughout the whole Group.

The EPRA performance data set out on this page provides the information required for the group to comply with The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. Direct emissions are the emissions from activities for which the company own or control including combustion of fuel and operation of facilities (known as Scope 1 emissions). Indirect emissions are emissions from purchase of electricity, heat, steam and colling purchased for own use (known as Scope 2 emissions).

The tables below contain our EPRA performance data for each relevant impact area.

Greenhouse Gas	EPRA Code	2021	2020
Like-for-like:
Total direct GHG emissions (tCO₂e)	GHG-Dir-LfL	3,309	3,622
Total indirect GHG emissions (tCO₂e)	GHG-Indir-LfL	3,772	4,139
Absolute :
Total direct GHG emissions (tCO₂e)	GHG-Dir-Abs	3,309	3,622
Total indirect GHG emissions (tCO₂e)	GHG-Indir-Abs	3,772	4,139
Normalised:
GHG intensity from building energy consumption
(tCO₂e per operating bed)	GHG-Int	0.82	0..88

2021 - % of total assets included: LfL - 100% / Abs - 100%

2021 - % of data estimated: LfL - 9.1% / Abs - 9.1%


Energy	EPRA Code	2021	2020
Like-for-like:
Total fuel consumption (kWh)	Fuels-LfL	18,068,259	19,699,010
Total district heating & cooling consumption (kWh)	DH&C-Abs	628,636	669,120
Total electricity consumption (kWh)	Elec-LfL	17,763,204	17,753,011
Absolute:
Total fuel consumption (kWh)	Fuels-Abs	18,068,259	19,699,010
Total district heating & cooling consumption (kWh)	DH&C-Abs	628,636	669,120
Total electricity consumption (kWh)	Elec-Abs	17,763,204	17,753,011
Normalised:
Building energy intensity (kWh per operating bed)	Energy-Int	4,228.73	4,339.84

2021 - % of total assets included: LfL - 100% / Abs - 100%

2021 - % of data estimated: LfL - 9.1% / Abs - 9.1%


Water	EPRA Code	2021	2020
Like-for-like:
Total water consumption (m3)	Water-LfL	353,826	356,979
Absolute:
Total water consumption (m3)	Water-Abs	353,826	356,979
Normalised:
Building water intensity (m3 per operating bed)	Water-Int	41.04	40.64

2021 - % of total assets included: LfL - 100% / Abs - 100%

2021 - % of data estimated: LfL - 59% / Abs - 59%

LYNNE FENNAH

Chief Financial and Sustainability Officer

2 March 2022

SECTION 172

Section 172(1) of the Companies Act 2006 "Duty to promote the success of the company" A director of a company must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

The Likely Consequences of Any Decision in the Long Term

The Board provides oversight over the Company's performance and gives guidance as to the long-term strategy of the Company. The day-to-day management and decision-making is delegated by the Board to the Executive Committee which provides regular updates to the Board. This allows the Board to monitor the performance of the Company and ensure that the Company is progressing in line with the long-term strategy. The KPIs reported on are the key metrics which the Board reviews, which are supplemented by further detailed reporting.

The Interests of the Company's Employees

Our people are crucial to the Company's success; they provide our customers with exceptional service to ensure they feel at home. The Board recognises how vital our people are and as such all decisions taken by the Board consider the interests of the Company's employees.

The Board has designated Alice Avis (Senior Independent Non-Executive Director) to liaise with the Colleague Forum. This allows a direct conduit between the Board and our people. This gives the Board insight into the views and concerns of our people and allows them to ensure their decisions are aligned with the interests of the Company's employees.

The Need to Foster the Company's Business Relationships with Suppliers, Customers and Others

The Company has a few key suppliers and the Board is involved in reviewing and approving any key contracts which the Company enters into. As such the Board provides oversight and challenge to key suppliers. Day-to-day relationships with Company suppliers are delegated to the Senior Leadership Team to ensure a close relationship is fostered.

Without customers the Company could not exist, and as such the Board takes great interest in fostering relationships with these customers. The Board reviews the results of the biannual customer survey, as well as receiving and reviewing other ad hoc reports on our customers' preferences and wishes. As part of the CEO's Board reporting, our customers sit as a standing agenda item. The Board believes that fostering a close relationship and a deep understanding of our customers is key to the Company's success.

The Impact of the Company's Operations on the Community and the Environment

The community and environment in which the Company operates in is a key priority for the Board. The Board identified that the Company's ESG strategy was not strong enough and so set about reviewing this. The Board takes the impact of the Group's operations on the community and environment into account in each decision. The decisions which the Board take can have widespread ramifications. Reviewing this impact is not a perfunctory exercise but one which the Board believes is a key responsibility, which includes robust challenge of all decisions.

The Desirability of the Company Maintaining a Reputation for High Standards of Business Conduct

The Board recognises the importance of maintaining a reputation for high standards of business conduct. The Board always seeks to make the best decision for the Company which while taking into account the needs of all of our stakeholders also reflects morally on our obligations as a Company.

The Board encourages this principle throughout the business and directs the Company's ethos through the Company purpose and values. In 2021 the Board approved the relaunched values.

The Board also encourages the Company to go above and beyond in certain areas and one particular example is mental health welfare, where the Board pushed for support for both our people and our customers to be set up.

The Need to Act Fairly as Between Shareholders of the Company

The Board believes transparency and accountability of the business is paramount to encourage shareholder confidence. The Board listens to and reviews the views across our shareholder base.

The need to act fairly between all of our shareholders underpins the Board's decisions and the Board receives regular feedback from shareholders after our annual and interim results release. The Board also receives and reviews feedback from research analysts throughout the year. This helps to identify key shareholder trends which the Board takes note of. The capital structure of the Company as a REIT, limiting individual shareholdings to a maximum of 10% of issued share capital, helps to ensure there are no dominant shareholders and that all shareholders are treated equally.

Principal Decision 1 - January 2021 - Commencing the disposal programme

After a segmentation analysis of the property portfolio, a number of non-core assets were identified. In January 2021 the Board agreed that the first four proposed disposals should proceed and that the Group should look into the future of our segment D assets.

Long-term success considerations

The actions which the Board undertook were focused on ensuring that the Group's property portfolio was in the best position possible to enact the Group's strategy.

The assets sold were deemed non-core by the Group and fitted into segment D of our segmentation analysis.

The Board then agreed that the sales proceeds would be reinvested into the business either in refurbishment programmes or in further purchases of standing assets or development opportunities.

Stakeholder impact considerations

Customers - The Board considered that when our customers book a Hello Student^® room then they should receive a consistent offering. Disposing of the segment D assets which would not give customers a consistent stay when compared to our segment A or B assets would help achieve this.

People - The Board considered how these decisions would impact people. The main impact would be that by creating a better aligned property portfolio we would place the Group in a stronger position, which will create a better company to work for in the future.

Shareholders - The Board considered that our shareholders would benefit from these decisions, as they would help to protect the long-term viability of the Company through having a well aligned property portfolio.

Community/Environment - The Board considered whether there were any adverse impacts on either the community or environment and concluded that the above decision would have no adverse impact.

Outcomes

The actions taken by the Board allowed four properties to be sold in the year. As part of the sanctioning of the disposal of category D assets, a further five assets were unconditionally exchanged at the year end and completed in January 2022. The Group has successfully sold nearly 50% of its non-core category D assets.

The Board's belief is that this principal decision taken was a positive decision for all stakeholders.

Principal Decision 2 - May 2021 - Further investment in our internal platform

The Board identified that through successfully in-housing our revenue management platform, we had a significant opportunity to leverage this platform to give us a far greater understanding of our customers through data analytics. As such the Board agreed to embark upon a roadmap to invest further into our internal revenue management platform.

Long-term success considerations

Through gaining a better understanding of our data and getting detailed analytics of where we had drop offs in our booking process we will be able to improve our booking conversion rate. Ensuring that we maximise the revenue from all of our buildings allows us to maximise returns and generate further capital which we can reinvest in the future. In addition, having the whole platform in-house means the investment we make can be utilised for years to come.

Stakeholder impact considerations

Customers - The Board considered that by improving the data we have about customers we can improve all aspects of the customers' booking journey allowing our customers to have a more tailored and seamless booking experience. This will help to increase customer satisfaction as well as customer retention.

People - The Board considered that by increasing our understanding of the booking process, we can help train our people on what our customers really want. This helps our people ensure that our buildings are full year after year and thus increases their progression prospects within the Group.

Shareholders - The Board considered that our shareholders would benefit from these decisions; the investment into the internal platform would quickly be repaid by higher occupancy, each percentage point of revenue occupancy gained is around £750,000. This means there is a short payback period for any investment made.

Community/Environment - The Board considered whether there were any adverse impacts on either the community or environment and concluded that the above decision would have no adverse impact.

Outcomes

The outcome was that the Board approved the investment into our internal revenue management project. We have already started to see the benefits from this investment, such as introducing a new dynamic pricing model and platform that adopts the pricing strategy and regularly adjusts pricing to take into account occupancy and market conditions and allows us to optimise revenue opportunity.

The Board's belief is that this principal decision taken was a positive decision for all stakeholders.

Principal Risks and Uncertainties

During 2021 COVID-19 has continued to have a material impact on our business.

The impact has primarily affected has been on our student demographic, reducing the proportion of international students. Health and safety risks around cladding and the impact of climate change continue to dominate the environment in which we operate in, and our risks, their impact and probability have been amended as appropriate.

The risk pertaining to Brexit has decreased materially and while there are some impacts around supply chain and people costs, these are expected to reduce.

The Board regularly assesses the risk appetite of the Group, with the Audit and Risk Committee formally reviewing the effectiveness of our risk management process and internal control systems biannually. During the year, the Committee has not identified or been advised of any material failings or weaknesses.

Changes to Principal Risks

The Committee decided to amalgamate two risks "Student Demand Risk" and "Revenue Risk" under one centralised Revenue Risk (E1). The key driver of revenue risk is the level of student demand for our product, which can be broken down into a number of factors. Some of these factors are directly correlated with COVID-19, such as the change in UK student demographics as the pandemic means international students choose to stay away as a result of travel restrictions. Other factors, such as how attractive UK tertiary education is seen in the international marketplace and whether the high costs of university reflect value for money.

The Committee decided to add a new internal risk, "Safe and Sustainable Buildings Risk" (I4). This risk is made up of two components, firstly safety - the capital expenditure to ensure our buildings comply with forthcoming changes in fire and safety legislation. Second, sustainability of our buildings - the physical risks to our buildings caused by climate change, i.e. flooding, extreme change between hot summers and cold winters. These physical risks need to be managed through ensuring our buildings are designed and operated in the correct manner.

The Committee reviewed the emerging risks and considered whether climate change should be added as a principal risk due to the increase in regulation around compliance and reporting on energy efficiency, which brings added costs. There is also the impact of transitioning to a low-carbon economy, with the risk of rising costs meaning that some properties become unviable in their current format. The Committee considered that some of the physical risks around climate change had been included under I4, and so at this time would not be including a separate climate change principal risk. The Committee will continue to keep this under review.

The Audit and Risk Committee has reviewed and approved the above changes to our principal risks and risk appetite. The trends relating to all the principal risks and uncertainties are set out in the table further on in this report.

Risk Responsibilities

The Board

The Board has overall responsibility for…

the determination of the Group's risk appetite, the setting of objectives and policies, and has ultimate responsibility for managing risk.

Audit and Risk Committee

The Audit and Risk Committee formally reviews…

the effectiveness of our risk management processes and internal control systems biannually.

Senior Leadership Team

Senior management are responsible for…

reviewing and monitoring the Group's key risks, and overseeing the implementation and operation of the risk management and internal control systems.

Our People

Everyone at Empiric has a role to play…

in identifying key risks facing the Group, and in the day-to-day management of risk through applying the appropriate controls, policies and processes.

Adapting risk management in a changing environment

Going concern - Viability Statement

The COVID-19 pandemic has created global economic uncertainty, and in particular an uncertainty around income for the upcoming 2022/23 academic years. Accordingly, the Group has prepared projections to 30 September 2023 and conducted a detailed going concern review and considered its liquidity position and banking covenant compliance strength.

As at 31 December 2021 the Group had £37 million in cash and £45 million of undrawn investment debt facilities. During the going concern period we have two facilities due for refinancing, one for £90 million with Lloyds due to expire in November 2022 and one with First Commercial Bank for £20 million due in March 2023. Subsequent to the year end the Group signed an agreement to extend its Lloyds RCF out to November 2025. This means the Group is well funded and has no refinancing requirements until March 2023 where we intend to extend the £20 million facility.

The Group's debt facilities include covenants in respect of LTV and interest cover, both projected and historic, and all debt facilities are ring fenced with each specific lender. The Group maintains regular dialogue with all of its lenders as part of the ordinary course of business, however during the pandemic we have increased the frequency of this dialogue. As part of these discussions with our lenders we have had conversations specifically around the interest cover covenants to ensure we either temporarily restructure these or gain the relevant waivers from the banks to ensure that no issues arise. To date all of our banks have been supportive during this period and have expressed commitment to the long-term relationship they wish to build with Empiric.

Management has evaluated a number of scenarios in its going concern model. The critical assumption is the revenue occupancy for the 2022/23 academic year. Upside, central and downside stress cases have been constructed showing 2022/23 academic year occupancy of between 65% and 90%.

The Group continues to maintain covenant compliance for its LTV thresholds throughout the going concern assessment period. Property values would have to fall by more than 18% from December 2021 valuations before LTV covenants are breached.

In Scenario 1, and 2 above the Group continues to maintain covenant compliance for all its interest cover covenants. It maintains adequate levels of liquidity throughout. In addition, no assumption is made as to the level of additional cost-cutting measures or mitigating actions which could potentially be undertaken.

In Scenario 3, under our Downside Stress Scenario, we would not meet projected interest cover covenants at the 31 March 2022 measurement date for one lender. We would also have further breaches on two other facilities in the going concern period. The Group has cure rights under the lending agreements but would need to raise an additional £22million in cash to have sufficient liquidity to cure this ICR breach. The Board considers this scenario as extremely unlikely and that it is a severe downside scenario.

As at 2 March 2022 booking levels for the upcoming 2022/23 academic year are currently at 36% this compared to 20% for the 2021/22 academic year as at 16 March 2021. As such the Board is expecting that Scenario 1 is the most likely scenario at this time.

To support the Directors' going concern assessment, the management also evaluated the occupancy level at which all ICR covenant tests were breached and, additionally, the impact of a "Reverse Stress Test" which was performed to determine the level of revenue occupancy for the 2022/23 academic year at which the Group would need to seek alternative sources of funding. For this modelling we kept revenue occupancy for the 2021/22 academic year at 84%.

The Directors noted that if occupancy falls below 45% then the Group would be in breach of all ICR covenants, and at 47% revenue occupancy for the 2022/23 academic year (18% lower revenue occupancy than our Downside Stress Scenario) the Group would need to seek alternative sources of funding.

Having reviewed and considered the three modelled scenarios, the 2022/23 academic year occupancy level at which ICR covenants would be breached and the level at which alternative sources of funding would be required, the Directors consider that the Group has adequate resources in place for at least 12 months from the date of these results and have therefore adopted the going concern basis of accounting in preparing the annual financial statements.

	Revenue occupancy	Revenue occupancy
	for 2021/22 academic	for 2022/23 academic
Scenario	year	year
Scenario 1 - Upside Scenario	84%	90%
Scenario 2 - Central Scenario	84%	85%
Scenario 3 - Downside Stress Scenario	84%	65%

External Risks Table

Strategic Links

1. Customers

2. Brand

3. People and Operations

4. Buildings

5. Shareholder Outcomes

	Risk and brief description	Potential impact	Mitigation in place	Trend
E1	Revenue Risk There is a risk that the student demand for our product will decrease, e.g. changes in student demographic and travel restrictions. - Link to Strategy 1 2 3 4 5	- Loss of revenue - Erosion of asset values - High void costs - Potential breach in bank covenants	- Executive Committee and the Board closely monitor government policy, student numbers and other micro and macro-economic factors. - Monitoring all travel restrictions and ensuring marketing is targeted to key international markets. - We ensure our assets are well located serving established leading universities. - Where possible, we ensure our buildings are fit for alternative use, such as private residential, subject to planning.	Increase due to current uncertainty through COVID-19.
E2	Competition Risk The risk of an increased level of competition and supply in the student sector. This risk varies for each city we are in as the market polarises and some universities have had declining student numbers year on year. - Link to Strategy 1 2 3 4 5	- Oversupply of student accommodation - Pressure on student rental growth - Inflated asset and land prices	- The number of UK students demographically are increasing year on year from 2021 which should benefit all cities. - Continuous review and analysis of which cities we want to target and those which we wish to diversify from depending on this risk. - We ensure our assets are well located serving established leading universities. - High-quality management information is provided across the business. - All properties are managed in-house under the Hello Student^® brand which provides a strong brand identity.	Stable as PBSA market remains stable.
E3	Property Market Risk The potential for a downturn in the property market. - Link to Strategy 1 2 3 4 5	- Erosion of asset values - Potential breach in bank covenants - Lower Total Return for shareholders	- Our assets are in prime locations, diversifying the risk. CBRE classifies 92% of the portfolio as prime or better. - We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term target of 35%. - The higher education sector is made up of a wide range of students from the UK, EU and non-EU countries, which helps to protect the student accommodation market.	Decrease due to the resilience shown through COVID-19.
E4	Regulatory Risk Large levels of regulation being applied to the student accommodation market. Note we have moved the management of fire safety regulations to risk I4. - Link to Strategy 1 2 3 4 5	- Potential impact on our Total Return - Reputational damage and penalties - Higher compliance costs	- Hello Student^® is ANUK accredited, and Lynne Fennah sits on the Student Accommodation Committee of the British Property Federation. - Involvement with these bodies means that we are well informed of any potential upcoming regulatory change. It also provides a basis for industry lobbying if required. - Our operational teams try to build close working relationships with local authorities to keep abreast of any changes.	Stable as minimal change to the regulatory environment.
E5	Funding Risk The availability of debt or equity and ability to raise it on acceptable terms. - Link to Strategy 1 2 3 4 5	- Stifling of future growth potential - Forced sale of assets to repay debt - Reduction of profit	- Average maturity of debt of 4.9 years with £45 million undrawn as at 31 December 2021. - We maintain prudent levels of gearing, with an LTV limit of 40% and a long-term target of 35%. - Experienced finance team with a strong track record in procuring both debt and equity.	Stable as minimal change to the funding environment.

Internal Risks Table

	Risk and brief description	Potential impact	Mitigation in place	Trend
I1	Health & Safety Risk The occurrence of a major health and safety incident including a fire or infectious outbreak. - Link to Strategy 1 2 3 4 5	- Injury and impact on customers, contractors, staff and visitors - Compensation costs incurred - Reputational impact - Loss of life in a worst-case scenario	- Health and safety metrics are reported monthly. - Policies, procedures and training for all staff. - Ultimate Board responsibility involving regular Board reporting from the Executive and recruitment of a Head of Health and Safety on track for Q1 2022. - Live compliance dashboard which is monitored daily. - Regular review of fire safety regulations and checks to ensure our buildings remain compliant with standards, going above and beyond fire safety requirements.	Stable due to minimal change in the health and safety environment.
I2	Cyber Security Risk The Group suffering from a cyber security breach, or the impact of a loss or mismanagement of personal customer data. - Link to Strategy 1 2 3 4 5	- Reputational damage - Deteriorated customer experience - Higher costs and reduced profitability - Financial impact due to potential fines under GDPR legislation	- Developed a business continuity plan to enable Group operations to continue in the event of a breach. - Centralised our IT network across the Group and recruited an in-house IT team. - Deployed an updated training programme for all staff. - Implemented a data monitoring system to protect our platforms across the IT estate.	Increase due to current geopolitical uncertainty.
I3	People Risk High turnover in front-line staff and the knock-on impact on customer service. - Link to Strategy 1 2 3 4 5	- Higher costs due to wage inflation - Impact on customer service due to lack of familiar faces - Loss of key business knowledge	- We are a Living Wage Employer ensuring that we attract and retain talent where possible. - Use of internal communications to try and increase employee engagement. - Ongoing training and development programme designed to upskill staff regularly and progress forward with their career within the business. - Exit interviews are used to identify any areas for improvement within the business.	Stable as minimal change to the employment market.
I4	Safe and Sustainable Buildings Risk How our buildings will withstand increased legislation around fire safety as well as increased pressure from climate change and extreme weather conditions. - Link to Strategy 1 2 3 4 5	- High costs for compliance - Reputational impact - Potential challenges around insuring our buildings - Compensation claims - Decreased liquidity of our buildings	- In our June 2021 Interim Report we announced a £30 million capital expenditure plan to ensure that our buildings comply with future fire safety legislation. However, we are uncertain how much we will recover from developers so we have increased this estimate to £37 million. - Regular review of fire safety regulations and checks to ensure our buildings, at a minimum, remain compliant with standards. - Continuous assessment of our buildings as well as undertaking £4 million of capital expenditure on green initiatives in the next five years.	Increase due to greater focus on fire safety and potential upcoming legislation.

Emerging Risks

The Audit and Risk Committee considers emerging risks. These are new or unforeseen risks that the Committee is conscious of, however their potential impact is not fully known. The Committee reviews these biannually alongside the principal risks and uncertainties. The Audit and Risk Committee has detailed below the risks it believes are emerging and the potential impact it may have on our principal risks:

Emerging risk	Impact on principal risk probabilities	Mitigating factors
Geopolitical Crisis A geopolitical dispute between China or India and the UK could result in foreign governments placing embargoes on their students coming to study in the UK. This includes the unfolding crisis in Ukraine.	- Increase - E1 - Revenue Risk - Increase - E3 - Property Market Risk - Increase - E5 - Funding Risk	- Involvement with the BPF Student Accommodation Committee which lobbies the government on issues impacting the sector. - The UK Government has expressed its support for international students and the positive impact that they have on our economy.
Increasing Use of Online University Courses The COVID-19 pandemic has forced universities and students to use online teaching methods. The fact that the pandemic has shown that this style of teaching can be effective to some degree could result in a long-term move towards online courses which would not require purpose-built student accommodation.	- Increase - E1 - Revenue Risk - Increase - E3 - Property Market Risk	- Studies have revealed that a significant majority of students want to return to a campus-based experience as soon as possible. - University experience is seen as more of a life experience rather than just an educational stepping stone.
Climate Change Climate change has the potential to impact every business in the world. Climate change could impact planning legislation restricting supply of PBSA, cause flooding, increase government legislation across a wide range of areas and many other impacts. Our customer base of young students are very attuned to climate change, much more so than generations before them. The increased awareness around this issue is going to bring these issues and risks to the foreground.	- Increase - E1 - Revenue Risk - Increase - E3 - Property Market Risk - Increase - E5 - Funding Risk - Increase - I1 - Health and Safety Risk - Increase - I4 - Safe and Sustainable Buildings Risk	- ESG has become a key focus for the Group. Our progress will be monitored by our ESG Committee; read more on [pages x to x]. - We have announced that we will be a net zero business by 2035.
University Funding The level of funding, and how universities receive this, has changed significantly over the last 20 years. A number of universities are facing significant financial stress as a result of COVID-19 and there is a risk that a number of universities fall into administration. This would cause significant declines in student populations in the cities of the affected institution.	- Increase - E1 - Revenue Risk - Increase - E2 - Competition Risk - Increase - E3 - Property Market Risk - Increase - E5 - Funding Risk	- Reviewing our portfolio to ensure that we are aligned to cities with more than one university and which have strong financial backing.
Introduction of Regulation of the Student Accommodation Industry The COVID-19 pandemic has drawn attention to the vast range of level of service within the student accommodation industry. Some providers such as Empiric provided a supportive approach to students, whereas other providers took a more hard line approach which raised negative media attention. The industry is one which varies from HMO owners operating a handful of beds up to providers who operate tens of thousands of beds. This disparity and additional attention on the industry results in a risk that regulation may be applied to the industry.	- Increase - E1 - Revenue Risk - Increase - E3 - Property Market Risk - Increase - E4 - Regulatory Risk - Increase - I4 - Safe and Sustainable Buildings Risk	- We act as a responsible owner of student accommodation which does the right thing. Further legislation within the market may have a positive impact for the Group as less scrupulous suppliers are forced out of the market.
Pandemic The COVID-19 pandemic is constantly evolving and there is a continued potential threat that new strains of the virus become more damaging. This could impact many areas such as travel, both international and domestic, or future lockdowns. There is also the potential risk of future pandemics from viruses which are as yet unknown.	- Increase - E1 - Revenue Risk - Increase - E3 - Property Market Risk - Increase - E4 - Regulatory Risk - Increase - E5 - Funding Risk - Increase - I1 - Health and Safety Risk - Increase - I4 - Safe and Sustainable Buildings Risk	- Reviewing our marketing strategy and offering so that we appeal to UK nationals alongside international students. - The COVID-19 pandemic has shown that the robust and detailed protocols we have in place within our business can manage any impact.

Approval of the Strategic Report

The Strategic Report for the year ended 31 December 2021 has been approved by the Board and was signed off on its behalf by:

Throgmorton UK Limited

Company Secretary | 2 March 2022

Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare the Group and Company financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements and have elected to prepare the Company financial statements in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that year.

In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business; and

- prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. The Directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website Publication

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' Responsibilities Pursuant to DTR4

The Directors confirm that to the best of their knowledge:

- the Group financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and the undertakings included in the consolidation as a whole;

- the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the Parent Company, together with a description of the principal risks and uncertainties that they face; and

- the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

MARK PAIN

Chairman | 2 March 2022

GROUP STATEMENT OF COMPREHENSIVE INCOME

	Note	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Continuing operations
Revenue	2	55,967	59,444
Property expenses	3	(23,061)	(22,651)
Net rental income		32,906	36,793
Administrative expenses	4	(10,547)	(9,841)
Change in fair value of investment property	13	17,567	(37,603)
Operating profit/(loss)		39,926	(10,651)
Finance cost		(12,382)	(13,341)
Finance income		1	22
Net finance costs	5	(12,381)	(13,319)
Gain on disposal of investment property		1,652	-
Profit/(loss) before income tax		29,197	(23,970)
Corporation tax	7	-	-
Profit/(loss) for the year and total comprehensive income/(loss)		29,197	(23,970)
Earnings/(loss) per share expressed in pence per share	8
Basic		4.84	(3.97)
Diluted		4.84	(3.97)
Gross margin		58.8%	61.9%

GROUP STATEMENT OF FINANCIAL POSITION

	Note	At 31 December 2021 £'000	At 31 December 2020 £'000
ASSETS
Non-current assets
Property, plant and equipment	11	426	135
Intangible assets	12	1,318	1,054
Right of use asset		1,010	-
Investment property - Operational Assets	13	967,194	981,369
Investment property - Development Assets	13	28,692	23,751
Total non-current assets		998,640	1,006,309
Current assets
Trade and other receivables	14	7,839	14,510
Assets classified as held for sale	15	25,870	-
Cash and cash equivalents	16	37,127	33,927
Total current assets		70,836	48,437
Total assets		1,069,476	1,054,746
LIABILITIES
Current liabilities
Trade and other payables	17	19,990	15,527
Borrowings	18	44,712	-
Lease liability		107	-
Deferred income	17	29,862	20,676
Total current liabilities		94,671	36,203
Non-current liabilities
Borrowings	18	326,244	385,266
Lease liability		963	-
Total non-current liabilities		327,207	385,266
Total liabilities		421,878	421,469
Total net assets		647,598	633,277
Equity
Called up share capital	19	6,032	6,032
Share premium	20	295	257
Capital reduction reserve	21	459,958	475,038
Retained earnings		181,313	151,950
Total equity		647,598	633,277
Total equity and liabilities		1,069,476	1,054,746
Net Asset Value per share basic (pence)	9	107.36	105.00
Net Asset Value per share diluted (pence)	9	106.75	104.60
EPRA NTA per share (pence)	9	107.36	104.80

These financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:

LYNNE FENNAH

Director

COMPANY STATEMENT OF FINANCIAL POSITION

	Note	At 31 December 2021 £'000	At 31 December 2020 £'000
ASSETS
Fixed assets
Property, plant and equipment	11	338	56
Intangible assets	12	1,318	968
Right of use asset		1,010	-
Investments in subsidiaries	30	187,598	187,598
Total fixed assets		190,264	188,622
Current assets
Trade and other receivables	14	311	353
Amounts due from Group undertakings	14	369,048	350,578
Cash and cash equivalents	16	1,977	24,775
Total current assets		371,336	375,706
Total assets		561,600	564,328
CREDITORS
Current creditors
Trade and other payables	17	5,047	2,918
Amounts due to Group undertakings	17	27,177	9,548
Lease Liability		107	-
Total non-current creditors		32,331	12,466
Non-current creditors
Borrowings	18	19,980	19,961
Lease liability		963	-
Total non-current creditors		20,943	19,961
Total creditors		53,274	32,427
Total net assets		508,326	531,901
Capital and reserves
Called up share capital	19	6,032	6,032
Share premium	20	295	257
Capital reduction reserve	21	459,958	475,038
Retained earnings		42,041	50,574
Total capital and reserves		508,326	531,901

The Company made a loss for the year of £8,699,000 (2020: £46,198,000 profit).

These financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:

LYNNE FENNAH

Director

GROUP STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2021	Called up share capital £'000	Share premium £'000	Capital reduction reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2021	6,032	257	475,038	151,950	633,277
Changes in equity
Profit for the year	-	-	-	29,197	29,197
Total comprehensive income for the year	-	-	-	29,197	29,197
Share-based payments	-	-	-	204	204
Share options exercised	-	38	-	(38)	-
Dividends	-	-	(15,080)	-	(15,080)
Total contributions and distribution recognised directly in equity	-	38	(15,080)	166	(14,876)
Balance at 31 December 2021	6,032	295	459,958	181,313	647,598
Year ended 31 December 2020
Balance at 1 January 2020	6,032	257	482,578	175,891	664,758
Changes in equity
Loss for the year	-	-	-	(23,970)	(23,970)
Total comprehensive income for the year	-	-	-	(23,970)	(23,970)
Share-based payments	-	-	-	29	29
Dividends	-	-	(7,540)	-	(7,540)
Total contributions and distribution recognised directly in equity	-	-	(7,540)	29	(7,511)
Balance at 31 December 2020	6,032	257	475,038	151,950	633,277

COMPANY STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2021	Called up share capital £'000	Share premium £'000	Capital reduction reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2021	6,032	257	475,038	50,574	531,901
Changes in equity
Loss for the year	-	-	-	(8,699)	(8,699)
Total comprehensive loss for the year	-	-	-	(8,699)	(8,699)
Share-based payments	-	-	-	204	204
Share options exercised	-	38	-	(38)	-
Dividends	-	-	(15,080)	-	(15,080)
Total contributions and distribution recognised directly in equity	-	38	(15,080)	166	(14,876)
Balance at 31 December 2021	6,032	295	459,958	42,041	508,326
Year ended 31 December 2020
Balance at 1 January 2020	6,032	257	482,578	4,347	493,214
Changes in equity
Profit for the year	-	-	-	46,198	46,198
Total comprehensive loss for the year	-	-	-	46,198	46,198
Share-based payments	-	-	-	29	29
Dividends	-	-	(7,540)	-	(7,540)
Total contributions and distribution recognised directly in equity	-	-	(7,540)	29	(7,511)
Balance at 31 December 2020	6,032	257	475,038	50,574	531,901

GROUP STATEMENT OF CASH FLOWS

	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Cash flows from operating activities
Profit/(loss) before income tax	29,197	(23,970)
Share-based payments	204	29
Depreciation and amortisation	457	326
Finance income	(1)	(22)
Finance costs	12,382	13,341
Intangible asset impairment	-	898
Gain on disposal of investment property	(1,652)	-
Change in fair value of investment property	(17,567)	37,603
	23,020	28,205
Decrease/(increase) in trade and other receivables	6,670	(3,971)
Increase in trade and other payables	3,532	1,653
Increase/(decrease) in deferred rental income	9,186	(8,528)
	19,388	(10,846)
Net cash flows generated from operations	42,408	17,359
Cash flows from investing activities
Purchases of tangible fixed assets	(427)	(72)
Purchases of intangible assets	(537)	(370)
Purchase of investment property	(15,701)	(14,258)
Interest received	1	22
Proceeds on disposal of investment property, net of selling costs	17,982	-
Net cash flows from investing activities	1,318	(14,678)
Cash flows from financing activities
Dividends paid	(13,589)	(7,540)
Bank borrowings drawn	-	77,800
Bank borrowings repaid	(15,000)	(42,800)
Loan arrangement fee paid	(168)	(1,009)
Finance cost (excluding fair value loss on derivatives)	(11,769)	(11,722)
Net cash flows from financing activities	(40,526)	14,729
Increase in cash and cash equivalents	3,200	17,410
Cash and cash equivalents at beginning of year	33,927	16,517
Cash and cash equivalents at end of year	37,127	33,927

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

1.1 Period of Account

The consolidated financial statements of the Group are in respect of the reporting period from 1 January 2021 to 31 December 2021.

The consolidated financial statements of the Group for the year ended 31 December 2021 comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries and were approved by the Board for issue on 2 March 2022. The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are admitted to the official list of the UK Listing Authority, a division of the Financial Conduct Authority, and traded on the London Stock Exchange. The registered address of the Company is disclosed in the Company information.

1.2 Basis of Preparation

The consolidated financial statements of the Group for the year to 31 December 2021 comprise the results of Empiric Student Property plc (the "Company") and its subsidiaries (together, the "Group"). The Group and Parent Company financial statements have been prepared on a going concern basis. The Group financial statements have been prepared in accordance with UK adopted international accounting standards. The Parent Company financial statements have been prepared in accordance with FRS 101, Financial Reporting Standards Reduced Disclosure Framework.

The Group's financial statements have been prepared on a historical cost basis, except for investment property and derivative financial instruments which have been measured at fair value. The consolidated financial statements are presented in Sterling which is also the Company and the Group's functional currency.

The Company has applied the exemption allowed under section 408(1b) of the Companies Act 2006 and has therefore not presented its own Statement of Comprehensive Income in these financial statements. The Group profit for the year includes a loss after taxation of £8,699,000 (2020: Profit of £46,198,000) for the Company, which is reflected in the financial statements of the Company.

The financial information does not constitute the Group's statutory accounts for the year ended 31 December 2021 or the year ended 31 December 2020 but is derived from those accounts. The Group's statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies. The Group's statutory accounts for the year ended 31 December 2021 will be delivered to the Registrar of Companies in due course. The Auditor has reported on both the December 2021 and December 2020 accounts; the reports were unqualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under Section 498 of the Companies Act 2006.

1.3 Disclosure Exemptions Adopted

In preparing the financial statements of the Parent Company, advantage has been taken of all disclosure exemptions conferred by FRS 101. The Parent Company financial statements do not include:

- certain comparative information as otherwise required by international accounting standards;

- a statement of cash flows;

- the effect of future accounting standards not yet adopted; and

- disclosure of related party transactions with other wholly owned members of the Group headed by Empiric Student Property plc.

In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated financial statements of Empiric Student Property plc. The Parent Company financial statements do not include certain disclosures in respect of:

- Financial instruments (other than certain disclosures required as a result of recording financial instruments at fair value); and

- Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and does not present its own profit and loss account in these financial statements.

1.4 Going Concern

As at 31 December 2021 the Group had £37 million in cash and £45 million of undrawn investment debt facilities. During the going concern period we have two facilities due for refinancing, one for £90 million with Lloyds due to expire in November 2022 and one with FCB for £20 million due in March 2023. Subsequent to the year end the Group signed an agreement to extend its Lloyds RCF out to November 2025. This means the Group is well funded and has no refinancing requirements until March 2023 where we intend to extend the £20 million facility.

Scenario	Revenue occupancy for 2021/22 academic year	Revenue occupancy for 2022/23 academic year
Scenario 1 - Upside Scenario	84%	90%
Scenario 2 - Central Scenario	84%	85%
Scenario 3 - Downside Stress Scenario	84%	65%

In Scenario 3, under our Downside Stress Scenario, we would not meet projected interest cover covenants at the 31 March 2022 measurement date for one lender. We would also have further breaches on two other facilities in the going concern period. However, the Group has cure rights under the lending agreements, however the Group would need to raise an additional £22 million in cash to have sufficient cash headroom to cure this ICR breach. The Board considers this scenario as extremely unlikely and that it is a severe downside scenario.

1.5 Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates

In the process of applying the Group's accounting policies, management has made the following estimates, which have the most significant effect on the amounts recognised in the consolidated financial statements:

(a) Fair Valuation of Investment Property

The market value of investment property is determined, by an independent external real estate valuation expert, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Properties have been valued on an individual basis. The valuation experts use recognised valuation techniques and the principles of IFRS 13.

The valuations have been prepared in accordance with the RICS Valuation - Professional Standards January 2014 (the "Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by valuers in estimating the fair value of investment property are set out in Note 13.

For properties under development, the fair value is calculated by estimating the fair value of the completed property using the income capitalisation technique less estimated costs to completion and an appropriate developer's margin.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

(b) Operating Lease Contracts - the Group as Lessor

The Group has investment properties which have various categories of leases in place with tenants. The judgements by lease type are detailed below:

- Student leases: As these leases all have a term of less than one year, the Group retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

- Nominations and Commercial leases: The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the lease terms, insurance requirements and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2021. Subsidiaries are those investee entities where control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if, and only if, it has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(b) exposure, or rights, to variable returns from its involvement with the investee; and

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-Group balances, transactions and unrealised gains and losses resulting from intra-Group transactions are eliminated in full.

Financial Assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. Other than financial assets in a qualifying hedging relationship, the Group's accounting policy for each category is as follows:

Fair Value Through Profit or Loss

This category comprises only in-the-money derivatives (see "Financial liabilities" section of out-of- money derivatives) . They are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Statement of Comprehensive Income in the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

Amortised Cost

These assets are primarily from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the Statement of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for intercompany receivables are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12-month expected credit losses against gross interest income are recognised. For those where the credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the Statement of Comprehensive Income (operating profit).

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and - for the purpose of the Statement of Cash Flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the Statement of Financial Position.

Financial Liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

Other than financial liabilities in a qualifying hedging relationship (see below), the Group's accounting policy for each category is as follows:

Fair Value Through Profit or Loss

This category comprises only out-of-the-money derivatives (see "Financial assets" for in-the-money derivatives). They are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Statement of Comprehensive Income. The Group does not hold or issue derivative financial instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

Other Financial Liabilities

Other financial liabilities include the following items:

- Bank borrowing is initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

- Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Intangible Assets

Intangible assets are initially recognised at cost and then subsequently carried at cost less accumulated amortisation and impairment losses.

Amortisation has been charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over either five or ten years depending on the nature of the assets useful life.

Investment Property

Investment property comprises property that is held to earn rentals or for capital appreciation, or both, and property under development rather than for sale in the ordinary course of business or for use in production or administrative functions.

Investment property is measured initially at cost including transaction costs and is included in the financial statements on unconditional exchange. Transaction costs include transfer taxes, professional fees and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating.

Once purchased, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Consolidated Statement of Comprehensive Income in the period in which they arise.

Investment property is derecognised when it has been disposed of, or permanently withdrawn from use, and no future economic benefit is expected from its disposal. The investment property is derecognised upon unconditional exchange. The difference between the net disposal proceeds and the carrying amount of the asset would result in either gains or losses at the retirement or disposal of investment property. Any gains or losses are recognised in the Consolidated Statement of Comprehensive Income in the period of retirement or disposal.

Property, Plant and Equipment

All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure which is directly attributable to the acquisition of the asset.

Depreciation has been charged to the Consolidated Statement of Comprehensive Income on the following basis:

- Fixtures and fittings: 15% per annum on a reducing balance basis; and

- Computer equipment: straight-line basis over three years.

Rental Income

The Group is the lessor in respect of operating leases. Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease term and is included in gross rental income in the Consolidated Statement of Comprehensive Income due to its operating nature.

Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non - cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the Consolidated Statement of Comprehensive Income when the right to receive them arises.

Where a student requested a rent refund and they met the criteria set out, including leaving the property, the Group recognised no further income in relation to that let, reduced cash with the cash amount refunded, wrote off any deferred income in relation to the refund and any difference between cash and deferred income was debited or credited to revenue in the Statement of Comprehensive Income.

Segmental Information

The Directors are of the opinion that the Group is engaged in a single segment business, being the investment in student and commercial lettings, within the United Kingdom.

Share-based Payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. So long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the remaining vesting period. National Insurance obligations with respect to equity-settled share-based payments awards are accrued over the vesting period.

Share Capital

Ordinary shares are classified as equity. External costs directly attributable to the issuance of shares are recognised as a deduction from equity.

Taxation

As the Group is a UK REIT, profits arising in respect of the property rental business are not subject to UK corporation tax.

Taxation in respect of profits and losses outside of the property rental business comprises current and deferred taxes. Taxation is recognised in the Consolidated Statement of Comprehensive Income except to the extent that it relates to items recognised as a direct movement in equity, in which case it is also recognised as a direct movement in equity.

Current tax is the total of the expected corporation tax payable in respect of any non-REIT taxable income for the year and any adjustment in respect of previous periods, based on tax rates applicable to the periods.

Deferred tax is calculated in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases, based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised in full (except to the extent that they relate to the initial recognition of assets and liabilities not acquired in a business combination). Deferred tax assets are only recognised to the extent that it is considered probable that the Group will obtain a tax benefit when the underlying temporary differences unwind.

1.6 Impact of New Accounting Standards and Changes in Accounting Policies

At the date of authorisation of these financial statements, the following accounting standards had been issued which are not yet applicable to the Group:

- IAS 1/8 Definition of Materiality Amendment

- IFRS 3 Definition of a Business

- IBOR Reform Phase 1

- IFRS 16 Amendment for Rent Concessions

The above standards or interpretations not yet effective are expected to have a material impact on these condensed consolidated financial statements of the Group.

2. REVENUE

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Student rental income	55,977	64,218
Student rental refunds	(1,805)	(6,539)
Commercial rental income	1,475	1,765
Other income	320	-
Total revenue	55,967	59,444

3. PROPERTY EXPENSES

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Direct site costs	7,006	7,575
Technology services	672	671
Site office and utilities	10,428	9,371
Cleaning and service contracts	2,989	2,922
Repairs and maintenance	1,966	2,112
Total property expenses	23,061	22,651

4. ADMINISTRATIVE EXPENSES

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Salaries and Directors' remuneration	5,278	4,655
Legal and professional fees	2,218	1,976
Other administrative costs	1,979	2,453
IT expenses	522	326
	9,997	9,410
Auditor's fees
Fees payable for the audit of the Group's annual accounts	224	210
Fees payable for the review of the Group's interim accounts	44	40
Fees payable for the audit of the Group's subsidiaries	150	136
Total auditor's fees	418	386
Abortive acquisition costs	132	45
Total administrative expenses	10,547	9,841

5. NET FINANCE COST

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Finance costs
Interest expense on bank borrowings	11,567	11,838
Amortisation of loan transaction costs	815	1,503
	12,382	13,341
Finance income
Interest received on bank deposits	1	22
	1	22
Net finance cost	12,381	13,319

6. EMPLOYEES AND DIRECTORS

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Wages and salaries	8,766	8,021
Pension costs	350	295
Cash bonus	150	-
Share-based payments	204	29
National insurance	914	725
	10,384	9,070
Less: Hello Student^® amounts included in property expenses	(5,106)	(4,415)
Amounts included in administrative expenses	5,278	4,655
The average monthly number of employees of the Group during the year was as follows:
Management	8	5
Administration - ESP	49	44
Operations - Hello Student^®	238	316
	295	365

	Group
Directors' remuneration	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Salaries and fees	993	928
Pension costs	77	86
Cash bonus	54	-
Payment in lieu of notice	-	351
Share-based payments	204	29
	1,328	1,394

A summary of the Directors' emoluments, including the disclosures required by the Companies Act 2006 is set out in the Directors' Remuneration Report.

7. CORPORATION TAX

The Group became a REIT on 1 July 2014 and as a result does not pay UK corporation tax on its profits and gains from its qualifying property rental business in the UK provided it meets certain conditions. Non-qualifying profits and gains of the Group continue to be subject to corporation tax as normal.

In order to achieve and retain REIT status, several conditions have to be met on entry to the regime and on an ongoing basis, including:

- at the start of each accounting period, the assets of the property rental business (plus any cash and certain readily realisable investments) must be at least 75% of the total value of the Group's assets;

- at least 75% of the Group's total profits must arise from the tax-exempt property rental business; and

- at least 90% of the tax exempt profit of the property rental business (excluding gains) of the accounting period must be distributed.

In addition, the full UK corporation tax exemption in respect of the profits of the property rental business will not be available if the profit financing cost ratio in respect of the property rental business is less than 1.25.

The Group met all of the relevant REIT conditions for the year ended 31 December 2021.

The Directors intend that the Group should continue as a REIT for the foreseeable future, with the result that deferred tax is not required to be recognised in respect of temporary differences relating to the property rental business.

	Group
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Current tax
Income tax charge/(credit) for the year	-	-
Adjustment in respect of prior year	-	-
Total current income tax charge/(credit) in the income statement	-	-
Deferred tax
Total deferred income tax charge/(credit) in the income statement	-	-
Total current income tax charge/(credit) in the income statement	-	-
The tax assessed for the year is lower than the standard rate of corporation tax in the year
Profit for the year	29,197	(23,970)
Profit before tax multiplied by the rate of corporation tax in the UK of 19% (2020: 19%)	5,547	(4,554)
Exempt property rental profits in the year	(4,160)	(2,042)
Exempt property revaluations in the year	(3,338)	7,144
Effects of:
Non-allowable expenses	121	70
Capital allowances	(1,066)	(1,006)
Gain on disposal not taxable	314	-
Unutilised current year tax losses	2,582	388
Total current income tax charge/(credit) in the income statement	-	-

A deferred tax asset in respect of the tax losses generated by the residual (non-tax exempt) business of the Group of £2,581,000 (31 December 2020: £388,000) will be recognised to the extent that their utilisation is probable. On the basis that the residual business is not expected to generate taxable profits in future periods against which the losses will be applied, a deferred tax asset of £5,160,000 (2020: £3,027,000) has not been recognised in respect of such losses.

8. EARNINGS PER SHARE

The ordinary number of shares is based on the time-weighted average number of shares throughout the year.

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

EPRA EPS, reported on the basis recommended for real estate companies by EPRA, is a key measure of the Group's operating results.

Adjusted earnings is a performance measure used by the Board to assess the Group's dividend payments. Licence fees, development rebates and rental guarantees are added to EPRA earnings on the basis noted below as the Board sees these cash flows as supportive of dividend payments.

- The adjustment for licence fee receivable is calculated by reference to the fraction of the total period of completed construction during the period, multiplied by the total licence fee receivable on a given forward-funded asset.

- The development rebate is due from developers in relation to late completion on forward-funded agreements as stipulated in development agreements.

- The discounts on acquisition are in respect of the vendor guaranteeing a rental shortfall for the first year of operation as stipulated in the sale and purchase agreement.

Reconciliations are set out below:

	Calculation of basic EPS £'000	Calculation of diluted EPS £'000	Calculation of EPRA basic EPS £'000	Calculation of EPRA diluted EPS £'000	Calculation of adjusted EPS £'000
Year to 31 December 2021
Earnings per IFRS statement of comprehensive income	29,197	29,197	29,197	29,197	29,197
Adjustments to remove:
Gain/loss on disposal of investment property	-	-	(1,652)	(1,652)	(1,652)
Changes in fair value of investment properties (Note 13)	-	-	(17,573)	(17,573)	(17,573)
Earnings/Adjusted Earnings	29,197	29,197	9,972	9,972	9,972
Weighted average number of shares ('000)	603,185	603,185	603,185	603,185	603,185
Adjustment for employee share options ('000)	-	254	-	254	-
Total number shares ('000)	603,185	603,439	603,185	604,439	603,185
Per-share amount (pence)	4.84	4.84	1.65	1.65	1.65
Year to 31 December 2020
Earnings	(23,970)	(23,970)	(23,970)	(23,970)	(23,970)
Adjustment to include discounts on acquisition due to rental guarantees in the year Adjustments to remove:	-	-	-	-	221
Changes in fair value of investment properties (Note 13)	-	-	37,603	37,603	37,603
Earnings/Adjusted Earnings	(23,970)	(23,970)	13,633	13,633	13,854
Weighted average number of shares ('000)	603,161	603,161	603,161	603,161	603,161
Adjustment for employee share options ('000)	-	-¹	-	551	-
Total number shares ('000)	603,161	603,161	603,161	603,712	603,161
Per-share amount (pence)	(3.97)	(3.97)	2.26	2.26	2.30

1 Due to the Group making a loss in the year, under IAS 33 the share options become antidilutive and thus are excluded from the above calculation.

9. NET ASSET VALUE PER SHARE

The principles of the three measures per EPRA are below:

EPRA Net Reinstatement Value: Assumes that entities never sell assets and aims to represent the value required to rebuild the entity.

EPRA Net Tangible Assets: Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.

EPRA Net Disposal Value: Represents the shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. As the Group is a REIT, no adjustment is made for deferred tax.

The Group considers NAV to be the most relevant measure of the NAV measures and we expect this to be our primary NAV measure going forward.

A reconciliation of the three EPRA NAV metrics from IFRS NAV is shown in the table below.

	NAV	EPRA NAV measures
		EPRA	EPRA	EPRA
Year ended 31 December 2021	IFRS £'000	NRV £'000	NTA £'000	NDV £'000
Net assets per Statement of Financial Position	647,598	647,598	647,598	647,598
Adjustments
Fair value of fixed rate debt	-	-	-	(14,333)
Purchaser's costs¹	-	34,168	-	-
Net assets used in per share calculation	647,598	681,766	647,598	633,265
Number of shares in issue
Issued share capital ('000)	603,203	603,203	603,203	603,203
Issued share capital plus employee options ('000)	606,649	606,649	606,649	606,649
Net Asset Value per share	£	£	£	£
Basic Net Asset Value per share	1.074	1.130	1.074	1.050
Diluted Net Asset Value per share	1.068	1.124	1.068	1.044

	NAV	EPRA NAV measures
Year ended 31 December 2020	IFRS £'000	EPRA NRV £'000	EPRA NTA £'000	EPRA NDV £'000
Net assets per Statement of Financial Position	633,278	633,278	633,278	633,278
Adjustments
Fair value of fixed rate debt	-	-	-	(30,545)
Purchaser's costs¹	-	32,830	-	-
Net assets used in per share calculation	633,278	666,108	633,278	602,733
Number of shares in issue
Issued share capital ('000)	603,161	603,161	603,161	603,161
Issued share capital plus employee options ('000)	605,475	605,475	605,475	605,475
Net Asset Value per share	£	£	£	£
Basic Net Asset Value per share	1.050	1.104	1.050	0.999
Diluted Net Asset Value per share	1.046	1.100	1.046	0.995

1 EPRA NTA and EPRA NDV reflect IFRS values which are net of purchaser's costs. Any purchaser's costs deducted from the market value are added back when calculating EPRA NRV.

10. DIVIDENDS PAID

	Group and Company
	Year ended 31 December 2021 £'000	Year ended 31 December 2020 £'000
Interim dividend of 1.25 pence per ordinary share in respect of the quarter ended 31 December 2020	-	7,540
Interim dividend of 2.50 pence per ordinary share in respect of the quarter ended 30 September 2021	15,080	-
	15,080	7,540

As at 31 December 2021 an accrual of £1,491,000 was being held relating to witholding tax on the 2021 dividend (31 December 2020: nil) On 23 February 2022 the Company declared a 0.625 pence dividend to be paid on 25 March 2022.

11. FIXED ASSETS

	Group			Company
Year ended 31 December 2021	Fixtures and fittings £'000	Computer equipment £'000	Total £'000	Fixtures and fittings £'000	Computer equipment £'000	Total £'000
Costs
As at 1 January 2021	490	338	828	490	219	709
Additions	347	82	429	347	18	365
As at 31 December 2021	837	420	1,257	837	237	1,074
Depreciation
As at 1 January 2021	471	222	693	462	191	653
Charge for the year	65	73	138	65	18	83
As at 31 December 2021	536	295	831	527	209	736
Net book value
As at 31 December 2021	301	125	426	310	28	338

	Group			Company
Year ended 31 December 2020	Fixtures and fittings £'000	Computer equipment £'000	Total £'000	Fixtures and fittings £'000	Computer equipment £'000	Total £'000
Costs
As at 1 January 2020	490	266	756	490	193	683
Additions	-	72	72	-	26	26
As at 31 December 2020	490	338	828	490	219	709
Depreciation
As at 1 January 2020	223	181	404	214	181	395
Charge for the year	49	41	90	49	10	59
Impairment	199	-	199	199	-	199
As at 31 December 2020	471	222	693	462	191	653
Net book value
As at 31 December 2020	19	116	135	28	28	56

12. INTANGIBLE ASSETS

	Group			Company
Year ended 31 December 2021	Hello Student^® website development £'000	NAVision¹ development £'000	Total £'000	NAVision¹ development £'000	Total £'000
Costs
As at 1 January 2021	878	1,641	2,519	1,641	1,641
Additions	-	537	537	537	537
As at 31 December 2021	878	2,178	3,056	2,178	2,178
Amortisation
As at 1 January 2021	792	673	1,465	673	673
Charge for the year	86	187	273	187	187
Impairment	-	-	-	-	-
As at 31 December 2021	878	860	1,738	860	860
Net book value
As at 31 December 2021	-	1,318	1,318	1,318	1,318

	Group				Company
Year ended 31 December 2020	Hello Student^® application development £'000	Hello Student^® website development £'000	NAVision¹ development £'000	Total £'000	NAVision¹ development £'000	Total £'000
Costs
As at 1 January 2020	311	878	1,271	2,460	1,271	1,271
Additions	-	-	370	370	370	370
As at 31 December 2020	311	878	1,641	2,830	1,641	1,641
Amortisation
As at 1 January 2020	311	339	191	841	191	191
Charge for the year	-	87	149	236	149	149
Impairment	-	366	333	699	333	333
As at 31 December 2020	311	792	673	1,776	673	673
Net book value
As at 31 December 2020	-	86	968	1,054	968	968

1. Relates to the development of our accounting system which enables us to bring our revenue management system in-house.

Impairment

Hello Student^® website development

During the prior year we conducted a review of our intangible asset relating to the Hello Student^® website. As can be seen on page xx, we have identified that overhauling our website is a priority. As such there was an impairment during the prior year writing off £366,000 of costs relating to the old website which have been deemed to be obsolete.

NAVision development

During the prior year we launched our new revenue management system. This new system has provided us with a number of benefits. As a result of the launch of this new release we conducted a review of our intangible asset relating to the NAVision development. It was found that there were a number of costs identified which were for parts of the system no longer in use under the new revenue management system. As such there was an impairment during the prior year writing off £333,000 of costs relating to the items within the NAVision system which were replaced by the new system.

13. INVESTMENT PROPERTY

Year ended 31 December 2021	Group
Year ended 31 December 2021	Investment properties freehold £'000	Investment properties long leasehold £'000	Total operational assets £'000	Properties under development £'000	Total investment property £'000
As at 1 January 2021	849,220	132,149	981,369	23,751	1,005,120
Property additions	6,173	1,808	7,981	7,418	15,399
Sale of investment property	(16,330)	-	(16,330)	-	(16,330)
Transfer to held for sale asset	(25,870)	-	(25,870)	-	(25,870)
Change in fair value during the year	22,259	(2,215)	20,044	(2,477)	17,567
As at 31 December 2021	835,452	131,742	967,194	28,692	995,886

	Group
Year ended 31 December 2020	Investment properties freehold £'000	Investment properties long leasehold £'000	Total operational assets £'000	Properties under development £'000	Total investment property £'000
As at 1 January 2020	861,639	137,741	999,380	29,700	1,029,080
Property additions	3,915	352	4,267	9,376	13,643
Transfer to/from developments	13,082	-	13,082	(13,082)	-
Change in fair value during the year	(29,416)	(5,944)	(35,360)	(2,243)	(37,603)
As at 31 December 2020	849,220	132,149	981,369	23,751	1,005,120

During the year £7,981,000 (31 December 2020: £4,267,000) of additions related to expenditure were recognised in the carrying value of standing assets.

In accordance with IAS 40, the carrying value of investment property is their fair value as determined by independent external valuers. This valuation has been conducted by CBRE Limited, as external valuer, and has been prepared as at 31 December 2021, in accordance with the Appraisal & Valuation Standards of the RICS, on the basis of market value. Properties have been valued on an individual basis. This value has been incorporated into the financial statements.

The valuation of all property assets uses market evidence and includes assumptions regarding income expectations and yields that investors would expect to achieve on those assets over time. Many external economic and market factors, such as interest rate expectations, bond yields, the availability and cost of finance and the relative attraction of property against other asset classes, could lead to a reappraisal of the assumptions used to arrive at current valuations. In adverse conditions, this reappraisal can lead to a reduction in property values and a loss in Net Asset Value.

The table below reconciles between the fair value of the investment property per the Consolidated Group Statement of Financial Position and investment property per the independent valuation performed in respect of each year end.

	Group
	As at	As at
	31 December	31 December
	2021	2020
	£'000	£'000
Value per independent valuation report	1,021,288	1,004,651
Add: Head lease	468	469
Deduct: Assets held for sale	(25,870)	-
Fair value per Group Statement of Financial Position	995,886	1,005,120

Fair Value Hierarchy

The following table provides the fair value measurement hierarchy for investment property:

		Quoted
		prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(Level 1)	(Level 2)	(Level 3)
Date of valuation 31 December 2021	£'000	£'000	£'000	£'000
Assets measured at fair value:
Student properties	1,002,748	-	-	1,002,748
Commercial properties	19,008	-	-	19,008
As at 31 December 2021	1,021,756	-	-	1,021,756

		Quoted prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(Level 1)	(Level 2)	(Level 3)
Date of valuation 31 December 2020	£'000	£'000	£'000	£'000
Assets measured at fair value:
Student properties	986,899	-	-	986,899
Commercial properties	18,221	-	-	18,221
As at 31 December 2020	1,005,120	-	-	1,005,120

There have been no transfers between Level 1 and Level 2 during the year, nor have there been any transfers between Level 2 and Level 3 during the year.

The valuations have been prepared on the basis of market value which is defined in the RICS Valuation Standards, as:

"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."

Market value as defined in the RICS Valuation Standards is the equivalent of fair value under IFRS.

The following descriptions and definitions relate to valuation techniques and key unobservable inputs made in determining fair values. The valuation techniques for student properties uses a discounted cash flow with the following inputs:

(a) Unobservable input: Rental income

The rent at which space could be let in the market conditions prevailing at the date of valuation. Range £85 per week-£387 per week (31 December 2020: £95-£357 per week).

(b) Unobservable input: Rental growth

The estimated average increase in rent based on both market estimations and contractual arrangements. Assumed decline of 1.56% used in valuations (31 December 2020: 1.48%).

The net initial yield is defined as the initial net income as a percentage of the market value (or purchase price as appropriate) plus standard costs of purchase.

Range: 4.25%-8.15% (31 December 2020: 4.45%-8.50%).

(d) Unobservable input: COVID-19 rent deduction

The COVID-19 rent deduction which impacted the 2020 valuation has now fallen away. See prior year annual report for basis of this deduction. We have allowed for a total capital deduction totalling £6,368,080 to reflect occupancy shortfall. This is based on CBRE's market perception that 2021/22 is going to be an unaffected year and that no risk deduction in respect of COVID-19 uncertainties is required.

(e) Unobservable input: Physical condition of the property

At the interim we indicated we would spend £30 million on health and safety works over the next five years. CBREs assumption is that £17.2 million of this cost should now be reflected in the valuation at the year-end in respect of in respect of work on external wall systems and fire stopping on buildings over 18 metres. Management have performed a sensitivity analysis to assess the impact of a change in their estimate of total costs relating to the £17.2 million deduction. A 20% increase in the estimated remaining costs would affect net valuation gains/losses on property in the IFRS P&L by £3.4 million and would reduce the Group's NTA by less than 0.1 pence on a per share basis. Whilst the spend is expected to be utilised within two years, there is uncertainty over this timing.

(f) Unobservable input: Planning consent

No planning enquiries were undertaken for any of the development properties.

(g) Sensitivities of measurement of significant unobservable inputs

As set out in the significant accounting estimates and judgements, the Group's portfolio valuation is open to judgements and is inherently subjective by nature.

As a result, the following sensitivity analysis has been prepared by the valuer:

	-3% change	+3% change	-0.25%	+0.25%
	in rental	in rental	change	change
	income	income	in yield	in yield
As at 31 December 2021	£'000	£'000	£'000	£'000
(Decrease)/increase in the fair value of the investment properties	(41,520)	40,710	48,480	(44,900)

	-3% change	+3% change	-0.25%	+0.25%
	in rental	in rental	change	change
	income	income	in yield	in yield
As at 31 December 2020	£'000	£'000	£'000	£'000
(Decrease)/increase in the fair value of the investment properties	(40,020)	40,060	46,340	(42,230)

(h) The key assumptions for the commercial properties are net initial yield, current rent and rental growth. A movement of 3% in passing rent and 0.25% in the net initial yield will not have a material impact on the financial statements.

14. TRADE AND OTHER RECEIVABLES

	Group		Company
	31 December	31 December	31 December	31 December
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Trade receivables	2,471	2,539	11	-
Other receivables	1,769	1,063	108	5
Amounts owed by property managers	8	6,505	-	-
Prepayments	2,949	4,157	192	341
VAT recoverable	642	246	-	7
	7,839	14,510	311	353
Amounts due from Group undertakings	-	-	369,048	350,578
	7,839	14,510	369,359	350,931

In the Company, amounts owed from Group undertakings are classified as due within one year due to their legal agreements with the debtor, however, could be recovered after more than one year should the debtors' circumstance not permit repayment on demand.

Movements on the Group provision for impairment of trade receivables were as follows:

	Group
	31 December	31 December
	2021	2020
	£'000	£'000
At 1 January	(1,449)	(594)
(Increase) in provision for receivables impairment	(100)	(855)
At 31 December	(1,549)	(1,449)

Provisions for impaired receivables have been included in property expenses in the income statement. Amounts charged to the impairment provision are generally written off when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the book value of each class of receivable mentioned above and its cash and cash equivalents. The Group does not hold any collateral as security, though in some instances students provide guarantors.

Management believes that the concentration of credit risk with respect to trade receivables is limited due to the Group's customer base being large, unrelated and living with us. As such we have a high level of communication with them.

At 31 December 2021, there were no material trade receivables overdue at the year end, and no aged analysis of trade receivables has been included. The carrying value of trade and other receivables classified at amortised cost approximates fair value. The Company performed a review of the expected credit loss on the amounts due from Group undertakings; there was no provision made during the year (2020: £nil). There are no security obligations related to these amounts due from Group undertakings.

15. HELD FOR SALE ASSETS

Management considers that five properties meet the conditions relating to assets held for sale, as per IFRS 5: Non-current Assets Held for Sale. The properties are expected to be disposed of during the next 12 months. The fair value of properties has been determined by a third-party valuer, CBRE.

All non-current assets, of these disposal assets, classified as held for sale are disclosed at their fair value.

These assets were subsequently disposed of on 1 February 2022; see Note 26 Subsequent Events for more detail.

The fair value of these properties are £25.87 million.

16. CASH AND CASH EQUIVALENTS

	Group		Company
	31 December	31 December	31 December	31 December
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Cash and cash equivalents	37,127	33,927	1,977	24,775

17. TRADE AND OTHER PAYABLES

	Group		Company
	31 December	31 December	31 December	31 December
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Trade payables	5,147	3,406	3,309	848
Other payables	2,070	1,800	178	251
Accrued expenses	12,015	9,574	802	1,072
Directors' bonus accrual	758	747	758	747
	19,990	15,527	5,047	2,918
Amounts owed to Group undertakings	-	-	27,177	9,548
	19,990	15,527	32,224	12,466

At 31 December 2021, there was deferred rental income of £29,862,000 (31 December 2020: £20,676,000) which was rental income that had been booked that relates to future periods.

The Directors consider that the carrying value of trade and other payables approximates to their fair value.

Amounts owed to Group undertakings are interest free and repayable on demand.

18. BANK BORROWINGS

A summary of the drawn and undrawn bank borrowings in the year is shown below:

	Group
	Bank	Bank		Bank	Bank
	borrowings	borrowings		borrowings	borrowings
	drawn	undrawn	Total	drawn	undrawn	Total
	31 December	31 December	31 December	31 December	31 December	31 December
	2021	2021	2021	2020	2020	2020
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January	390,000	52,500	442,500	355,000	35,000	390,000
Bank borrowings from new facilities in the year	-	-	-	52,800	42,500	95,300
Bank borrowings drawn in the year	-	-	-	25,000	(25,000)	-
Bank borrowings repaid during the year	(15,000)	15,000	-	(42,800)	-	(42,800)
At 31 December	375,000	67,500	442,500	390,000	52,500	442,500

In the previous year the Group refinanced two facilities, one with AIB for £32.8 million and the second with FCB for £10 million which was also extended to £20 million. In July 2020 we extended our RCF with Lloyds Bank from £70 million to £90 million. The Group also entered into a development facility with NatWest for £22.5 million during 2020 financial year. At 31 December 2021 no balance has been drawn down.

There is an undrawn RCF debt facility available of £45,000,000 at 31 December 2021 (31 December 2020: £30,000,000). The weighted average term to maturity of the Group's debt as at the year end is 4.9 years (31 December 2020: 5.9 years).

Bank borrowings are secured by charges over individual investment properties held by certain asset-holding subsidiaries. These assets have a fair value of £977,148,000 at 31 December 2021 (31 December 2020: £952,441,000). In some cases, the lenders also hold charges over the shares of the subsidiaries and the intermediary holding companies of those subsidiaries.

The Company has a £20 million unsecured facility with FCB - see above (2020: £20 million) repayable in more than one year, fully drawn. The balance net of loan arrangement fees carried as at 31 December 2021 was £19,980,000 (31 December 2020: £19,961,000).

Any associated fees in arranging the bank borrowings unamortised as at the year end are offset against amounts drawn on the facilities as shown in the table below:

	Group
	31 December	31 December
	2021	2020
Non-current	£'000	£'000
Balance brought forward	390,000	312,200
Total bank borrowings in the year	-	77,800
Less: Bank borrowings becoming current in the year	(45,000)	-
Less: Bank borrowings repaid during the year	(15,000)	-
Bank borrowings drawn: due in more than one year	330,000	390,000
Less: Unamortised costs	(3,756)	(4,734)
Bank borrowings due in more than one year	326,244	385,266

	Group
	31 December	31 December
	2021	2020
Current	£'000	£'000
Balance brought forward	-	42,800
Less: Bank borrowings repaid during the year	-	(42,800)
Bank borrowings becoming current in the year	45,000	-
Bank borrowings drawn: due in less than one year	45,000	-
Less: Unamortised costs	(288)	-
Bank borrowings due in less than one year	44,712	-

Maturity of Bank Borrowings

	Group
	31 December	31 December
	2021	2020
	£'000	£'000
Repayable in less than one year	45,000	-
Repayable between one and two years	20,000	-
Repayable between two and five years	52,800	132,800
Repayable in over five years	257,200	257,200
Bank borrowings	375,000	390,000

Each of the Group's facilities has an interest charge which is payable quarterly. Four of the facilities have an interest charge that is based on a margin above SONIA whilst the other five facility interest charges are fixed at 3.97%, 3.52%, 3.24%, 3.64% and 3.20%. The weighted average rate payable by the Group on its investment debt portfolio as at the year end was 3.00% (31 December 2020: 2.90%). All variable rate loans have transitioned from LIBOR + margin to SONIA + margin, with the margin set at a rate that is intended to give an overall return to the lender equivalent to the LIBOR linked rate.

19. SHARE CAPITAL

	Group and Company		Group and Company
	31 December	31 December	31 December	31 December
	2021	2021	2020	2020
	Number	£'000	Number	£'000
Balance brought forward	603,160,940	6,032	603,160,940	6,032
Share options exercised	42,112	-		-
Balance carried forward	603,203,052	6,032	603,160,940	6,032

During the year there was one issue of 42,112 shares, on 2 June 2021 these related to an issue to an ex-Director under the deferred bonus scheme.

20. SHARE PREMIUM

The share premium relates to amounts subscribed for share capital in excess of nominal value:

	Group and Company
	31 December	31 December
	2021	2020
	£'000	£'000
Balance brought forward	257	257
Share premium on share options exercised	38	-
Balance carried forward	295	257

21. CAPITAL REDUCTION RESERVE

	Group and Company
	31 December	31 December
	2021	2020
	£'000	£'000
Balance brought forward	475,038	482,578
Less interim dividends declared and paid per Note 10	(15,080)	(7,540)
Balance carried forward	459,958	475,038

The capital reduction reserve account is a distributable reserve.

Refer to Note 10 for details of the declaration of dividends to shareholders.

22. LEASING AGREEMENTS

Future total minimum lease receivables under non-cancellable operating leases on investment properties are as follows:

	Group
	31 December	31 December
	2021	2020
	£'000	£'000
Less than one year	42,888	39,625
Between one and two years	1,353	1,169
Between two and three years	1,352	1,123
Between three and four years	1,331	1,102
Between four and five years	1,271	1,042
More than five years	7,759	6,269
Total	55,954	50,330

The above relates to commercial leases and nomination agreements with UK universities in place as at 31 December 2021. The impact of student leases for the forthcoming academic year signed by 31 December 2021 have not been included as the certainty of income does not arise until the tenant takes occupation of the accommodation. As at 31 December 2021, £32,038,000 (31 December 2020: £17,689,000) of the future minimum lease receivables have been received as cash.

23. CONTINGENT LIABILITIES

There were no contingent liabilities at 31 December 2021 (31 December 2020: £nil).

24. CAPITAL COMMITMENTS

The Group had capital commitments relating to developments totalling £8,567,000 at 31 December 2021 (31 December 2020: £11,331,000).

25. RELATED PARTY DISCLOSURES

Key Management Personnel

Key management personnel are considered to comprise the Board of Directors. Please refer to Note 6 for details of the remuneration for the key management.

Share Capital

There were no share transactions with related parties during the year ended 31 December 2021.

Share-based Payments

On 22 April 2021, the Company granted nil-cost options over a total of 1,432,400 (Duncan Garrood 800,000 and Lynne Fennah 632,400) ordinary shares pursuant to the Empiric 2014 Long Term Incentive Plan (the "2017-2020 LTIP Awards") for the 2021 financial year.

Details of the Director share ownership and dividends received are detailed on page 74 of the Annual Report.

Details of the shares granted and exercised are outlined in Note 27 in the Annual Report.

26. SUBSEQUENT EVENTS

On 1 February 2022 the Group sold five properties for a total of £27 million. The sale price was in line with the market value as at 31 December 2021. On 7 February 2022 the Group purchased one asset in Bristol for £19 million.

27. SHARE-BASED PAYMENTS

The Company operates two equity-settled share-based remuneration schemes for Executive Directors under the deferred annual bonus and LTIP. The details of the schemes are included in the Remuneration Committee Report.

Issued

During the year, the Company granted nil-cost options over a total of 293,177 ordinary shares to members of the Senior Leadership Team pursuant to the Empiric 2014 Long Term Incentive Plan (the "2017-2020 LTIP Awards") for the 2021 financial year.

Of the nil-cost options, 52,115 are currently exercisable. The weighted average remaining contractual life of these options was 1.7 years (2020: 1.7 years).

During the year to 31 December 2021 the amount recognised relating to the options was £204,000 (2020: £29,000).

The awards have the benefit of dividend equivalence. The Remuneration Committee will determine on or before vesting whether the dividend equivalent will be provided in the form of cash and/or shares.

	31/12/2021	31/12/2020	31/12/2019	31/12/2018	31/12/2017	31/12/2016
Outstanding number brought forward	2,314,539	1,250,045	1,051,708	1,477,817	3,913,420	2,880,391
Granted during the period	1,725,577	1,064,494	604,134	439,022	207,198	1,033,029
Vested and exercised during the period	(35,779)	-	(129,253)	(139,325)	(691,237)	-
Lapsed during the period	(558,017)	-	(276,544)	(725,806)	(1,951,564)	-
Outstanding number carried forward	3,446,320	2,314,539	1,250,045	1,051,708	1,477,817	3,913,420

The fair value on date of grant for the nil-cost options under the 2018-22 LTIP Awards and Annual Bonus Awards were priced using the Monte Carlo pricing model.

The following information is relevant in the determination of the fair value of these nil-cost options in the year:

		Annual Bonus
		Award
(a)	Weighted average share price at grant date of	0.88
(b)	Exercise price of	£nil
(c)	Contractual life of	3 years
(d)	Expected volatility of	26.30%
(e)	Expected dividend yield of	2.84%
(f)	Risk-free rate of	0.09%
(g)	The volatility assumption is based on a statistical analysis of daily share prices of comparator companies over the last three years
(h)	The TSR performance conditions have been considered when assessing the fair value of the options

28. FINANCIAL RISK MANAGEMENT

Financial Instruments

The Group's principal financial assets and liabilities are those which arise directly from its operations: trade and other receivables, trade and other payables; and cash and cash equivalents. Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial instruments that are shown in the financial statements:

Reconciliation of liabilities to cash flows from financing activities

	31 December	31 December
	2021	2020
	£'000	£'000
Bank borrowings and leasehold liability at start of the year	385,266	349,771
Cash flows from financing activities
Bank borrowings drawn	-	77,800
Bank borrowings repaid	(15,000)	(42,800)
Loan arrangement fees paid	(168)	(1,008)
Non-cash movements
Amortisation of loan arrangement fees	815	1,503
Recognition of lease liabilities	1,114	-
Bank borrowings and leasehold liability at end of the year	372,027	385,266

Risk Management

The Company and Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk.

The Board of Directors oversees the management of these risks.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

(a) Market Risk

Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Company and Group that are affected by market risk are principally the Company and Group bank balances along with the interest rate derivatives (swap and cap) entered into to mitigate interest rate risk.

(b) Credit Risk

Credit risk is the risk of financial loss to the Company and Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company and Group is exposed to credit risks from both its leasing activities and financing activities, including deposits with banks and financial institutions.

The Group has established a credit policy under which each new tenant is assessed based on an extensive credit rating scorecard at the time of entering into a lease agreement.

The Group's review includes external rating, when available, and in some cases bank references.

The Group determines concentrations of credit risk by monthly monitoring the creditworthiness rating of existing customers and through a monthly review of the trade receivables' ageing analysis.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "B" are accepted.

Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in Note 14.

(i) Tenant Receivables

Tenant receivables, primarily tenant rentals, are presented in the Group Statement of Financial Position net of allowances for doubtful receivables and are monitored on a case -by-case basis. Credit risk is primarily managed by requiring tenants to pay rentals in advance and performing tests around strength of covenant prior to acquisition. There are no trade receivables past due as at the year end.

(ii) Credit Risk Related to Financial Instruments and Cash Deposits

One of the principal credit risks of the Company and Group arises with the banks and financial institutions. The Board of Directors believes that the credit risk on short-term deposits and current account cash balances are limited because the counterparties are banks, which are committed lenders to the Company and Group, with high credit ratings assigned by international credit rating agencies.

Credit ratings (Moody's)	Long-term	Outlook
AIB Group	Baa1	Stable
Canada Life	Aa3	Stable
Mass Mutual	Aa3	Stable
Scottish Widows	A2	Stable
Lloyds Bank Plc	A2	Stable

Liquidity risk arises from the Company and Group management of working capital, and going forward, the finance charges and principal repayments on any borrowings, of which currently there are none. It is the risk that the Company and Group will encounter difficulty in meeting their financial obligations as they fall due as the majority of the Company and Group assets are property investments and are therefore not readily realisable. The Company and Group objective is to ensure they have sufficient available funds for their operations and to fund their capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by management.

The following table sets out the contractual obligations (representing undiscounted contractual cash flows) of financial liabilities:

	Group
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2021
Bank borrowings and interest	-	3,182	54,379	194,206	189,087	440,854
Trade and other payables	-	19,990	-	-	-	19,990
	-	23,172	54,379	194,206	189,087	460,844

	Group
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2020
Bank borrowings and interest	-	3,021	9,063	199,749	283,925	495,758
Trade and other payables	-	15,527	-	-	-	15,527
	-	18,548	9,063	199,749	283,925	511,285

	Company
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2021
Bank borrowings and interest	-	119	357	20,076	-	20,552
Trade and other payables	-	5,047	-	-	-	5,047
	-	5,166	357	20,076	-	25,599

	Company
		Less than 3	3 to 12	1 to 5
	On demand	months	months	years	> 5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2020
Bank borrowings and interest	-	96	289	20,447	-	20,832
Trade and other payables	-	2,918	-	-	-	2,918
	-	3,014	289	20,447	-	23,750

29. CAPITAL MANAGEMENT

The primary objectives of the Group's capital management are to ensure that it remains a going concern and continues to qualify for UK REIT status.

The Board of Directors monitors and reviews the Group's capital so as to promote the long-term success of the business, facilitate expansion and to maintain sustainable returns for shareholders.

Capital consists of ordinary shares, other capital reserves and retained earnings.

30. SUBSIDIARIES

Those subsidiaries listed below are considered to be all subsidiaries of the Company at 31 December 2021, with the shares issued being ordinary shares. All subsidiaries are registered in London at the following address: 1st Floor Hop Yard Studios, 72 Borough High Street, London, SE1 1XF.

In each case the country of incorporation is England and Wales.

	Company
	31 December	31 December
	2021	2020
	£'000	£'000
As at 1 January	187,598	81,686
Additions in the year	-	106,215
Disposals	-	(303)
Balance at 31 December	187,598	187,598

During the prior year there were a number of subsidiaries which moved around the Group, due to reorganisations relating to debt; these were all non - cash movements whereby the plc forgave intercompany debt owned by subsidiaries in return for the issue of further shares.

Company	Status	Ownership	Principal activity
Brunswick Contracting Limited	Active	100%	Property Contracting
Empiric (Alwyn Court) Limited	Active	100%	Property Investment
Empiric (Baptists Chapel) Limited	Active	100%	Property Investment
Empiric (Bath Canalside) Limited	Active	100%	Property Investment
Empiric (Bath James House) Limited	Active	100%	Property Investment
Empiric (Bath JSW) Limited	Active	100%	Property Investment
Empiric (Bath Oolite Road) Limited	Active	100%	Property Investment
Empiric (Bath Piccadilly Place) Limited	Active	100%	Property Investment
Empiric (Birmingham Emporium) Limited	Active	100%	Property Investment
Empiric (Birmingham) Limited	Active	100%	Property Investment
Empiric (Bristol St Mary's) Limited	Active	100%	Property Investment
Empiric (Bristol St Mary's) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Bristol) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Bristol) Limited	Active	100%	Property Investment
Empiric (Buccleuch Street) Limited	Active	100%	Property Investment
Empiric (Canterbury Franciscans) Limited	Active	100%	Property Investment
Empiric (Canterbury Pavilion Court) Limited	Active	100%	Property Investment
Empiric (Cardiff Wndsr House) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Cardiff Wndsr House) Limited	Active	100%	Property Investment
Empiric (Centro Court) Limited	Active	100%	Property Investment
Empiric (Claremont Newcastle) Limited	Active	100%	Property Investment
Empiric (College Green) Limited	Active	100%	Property Investment
Empiric (Developments) Limited	Active	100%	Development Management
Empiric (Durham St Margarets) Limited	Active	100%	Property Investment
Empiric (Edge Apartments) Limited	Active	100%	Property Investment
Empiric (Edinburgh KSR) Limited	Active	100%	Property Investment
Empiric (Edinburgh KSR) Leasing Limited	Active	100%	Property Leasing
Empiric (Exeter Bishop Blackall School) Limited	Active	100%	Property Investment
Empiric (Exeter Bonhay Road) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Exeter Bonhay Road) Limited	Active	100%	Property Investment
Empiric (Exeter City Service) Limited	Active	100%	Property Investment
Empiric (Exeter DCL) Limited	Active	100%	Property Investment
Empiric (Exeter Isca Lofts) Limited	Active	100%	Property Investment
Empiric (Exeter LL) Limited	Active	100%	Property Investment
Empiric (Falmouth Maritime Studios) Limited	Active	100%	Property Investment
Empiric (Falmouth Ocean Bowl) Limited	Active	100%	Property Investment
Empiric (Falmouth Ocean Bowl) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow Ballet School) Limited	Active	100%	Property Investment
Empiric (Glasgow Bath St) Limited	Active	100%	Property Investment
Empiric (Glasgow George Square) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Glasgow George Square) Limited	Active	100%	Property Investment
Empiric (Glasgow George St) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow George St) Limited	Active	100%	Property Investment
Empiric (Glasgow) Leasing Limited	Active	100%	Property Leasing
Empiric (Glasgow) Limited	Active	100%	Property Investment
Empiric (Hatfield CP) Limited	Active	100%	Property Investment
Empiric (Huddersfield Oldgate House) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Huddersfield Oldgate House) Limited	Active	100%	Property Investment
Empiric (Huddersfield Snow Island) Leasing Limited	Active	100%	Property Leasing
Empiric (Lancaster Penny Street 1) Limited	Active	100%	Property Investment
Empiric (Lancaster Penny Street 2) Limited	Active	100%	Property Investment
Empiric (Lancaster Penny Street 3) Limited	Active	100%	Property Investment
Empiric (Leeds Algernon) Limited	Active	100%	Property Investment
Empiric (Leeds Mary Morris) Limited	Active	100%	Property Investment
Empiric (Leeds Pennine House) Limited	Active	100%	Property Investment
Empiric (Leeds St Marks) Limited	Active	100%	Property Investment
Empiric (Leicester 134 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 136-138 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 140-142 New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester 160 Upper New Walk) Limited	Active	100%	Property Investment
Empiric (Leicester Bede Park) Limited	Active	100%	Property Investment
Empiric (Leicester De Montfort Square) Limited	Active	100%	Property Investment
Empiric (Leicester Hosiery Factory) Limited	Active	100%	Property Investment
Empiric (Leicester Peacock Lane) Limited	Active	100%	Property Investment
Empiric (Leicester Shoe & Boot Factory) Limited	Active	100%	Property Investment
Empiric (Leicester West Walk) Limited	Dormant	100%	Property Investment
Empiric (Liverpool Art School/Maple House) Limited	Active	100%	Property Investment
Empiric (Liverpool Chatham Lodge) Limited	Active	100%	Property Investment
Empiric (Liverpool Grove Street) Limited	Active	100%	Property Investment
Empiric (Liverpool Hahnemann Building) Limited	Active	100%	Property Investment
Empiric (Liverpool Octagon/Hayward) Limited	Active	100%	Property Investment
Empiric (London Camberwell) Limited	Active	100%	Property Investment
Empiric (London Francis Gardner) Limited	Active	100%	Property Investment
Empiric (London Road) Limited	Active	100%	Property Investment
Empiric (Manchester Ladybarn) Limited	Active	100%	Property Investment
Empiric (Manchester Victoria Point) Limited	Active	100%	Property Investment
Empiric (Newcastle Metrovick) Limited	Active	100%	Property Investment
Empiric (Northgate House) Limited	Active	100%	Property Investment
Empiric (Nottingham 95 Talbot) Limited	Active	100%	Property Investment
Empiric (Nottingham Frontage) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Nottingham Frontage) Limited	Active	100%	Property Investment
Empiric (Oxford Stonemason) Limited	Active	100%	Property Investment
Empiric (Picturehouse Apartments) Limited	Active	100%	Property Investment
Empiric (Portobello House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Elm Grove Library) Limited	Active	100%	Property Investment
Empiric (Portsmouth Europa House) Leasing Limited	Active	100%	Property Leasing
Empiric (Portsmouth Europa House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Kingsway House) Limited	Active	100%	Property Investment
Empiric (Portsmouth Registry) Limited	Active	100%	Property Investment
Empiric (Provincial House) Leasing Limited	Active	100%	Property Leasing
Empiric (Provincial House) Limited	Active	100%	Property Investment
Empiric (Reading Saxon Court) Leasing Limited	Active	100%	Property Leasing
Empiric (Reading Saxon Court) Limited	Active	100%	Property Investment
Empiric (Snow Island) Limited	Active	100%	Property Investment
Empiric (Southampton) Leasing Limited	Active	100%	Property Leasing
Empiric (Southampton) Limited	Active	100%	Property Investment
Empiric (Southampton Emily Davies) Limited	Active	100%	Property Investment
Empiric (St Andrews Ayton House) Leasing Limited	Active	100%	Property Leasing
Empiric (St Andrews Ayton House) Limited	Active	100%	Property Investment
Empiric (St Peter Street) Limited	Active	100%	Property Investment
Empiric (Stirling Forthside) Leasing Limited	Dormant	100%	Property Leasing
Empiric (Stirling Forthside) Limited	Active	100%	Property Investment
Empiric (Stoke Caledonia Mill) Limited	Active	100%	Property Investment
Empiric (Summit House) Limited	Active	100%	Property Investment
Empiric (Talbot Studios) Limited	Active	100%	Property Investment
Empiric (Trippet Lane) Limited	Active	100%	Property Investment
Empiric (Twickenham Grosvenor Hall) Limited	Active	100%	Property Investment
Empiric (York Foss Studios 1) Limited	Active	100%	Property Investment
Empiric (York Lawrence Street) Limited	Active	100%	Property Investment
Empiric (York Percy's Lane) Limited	Active	100%	Property Investment
Empiric Acquisitions Limited	Active	100%	Immediate Holding Company
Empiric Investment Holdings (Five) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Four) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Six) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Three) Limited	Active	100%	Holding Company
Empiric Investment Holdings (Two) Limited	Active	100%	Holding Company
Empiric Investments (Five) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Four) Limited	Active	100%	Immediate Holding Company
Empiric Investments (One) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Six) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Three) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Two) Limited	Active	100%	Immediate Holding Company
Empiric Investments (Seven) Limited	Dormant	100%	Immediate Holding Company
Empiric Investment Holdings (Seven) Limited	Dormant	100%	Holding Company
Empiric Student Property Trustees Limited	Active	100%	Trustee of EBT
Empiric (Edinburgh South Bridge) Limited	Active	100%	Property Investment
Hello Student^® Management Limited	Active	100%	Property Management

31. ALTERNATIVE PERFORMANCE MEASURES

The below sets out our alternative performance measures.

Gross margin - Gross profit expressed as a percentage of rental income. A key business KPI to monitor how efficiently we are running our buildings.

	Group
	31 December	31 December
	2021	2020
Gross Margin	£'000	£'000
Revenue	55,967	59,444
Property Expenses	(23,061)	(22,651)
Net rental income	32,906	36,793
Gross Margin calculated as Net rental income/Revenue	58.8%	61.9%

Total Return ("TR") - The growth of NAV per share plus dividends per share measured as a percentage, A key business KPI to monitor the level of overall return the Group is generating.

	Group
	31 December	31 December
	2021	2020
Total Return	£'000	£'000
NAV per share brought forward	105.00	110.21
NAV per share carried forward	107.36	105.00
NAV growth per share in period	2.36	(5.21)
Dividend per share	2.50	1.25
Dividends plus NAV Growth in period per share	4.86	(3.96)
Total return calculated as Dividends plus NAV Growth in period per share/ NAV brought forward	4.6%	(3.6%)

Loan-to-value ("LTV") - A measure of borrowings used by property investment companies calculated as total drawn borrowings, net of cash, as a percentage of Property Value. A key business KPI to ensure we stay inline with our long term target of 35%.

	Group
	31 December	31 December
	2021	2020
Loan to value ("LTV")	£'000	£'000
Drawn borrowings	(375,000)	(390,000)
Less cash held at the year end	37,127	33,927
Net borrowings	337,873	356,073
Property valuation	1,021,288	1,004,651
LTV calculated as net borrowings / property valuation	33.1%	35.4%

DEFINITIONS

Adjusted EPS - Adjusted earnings per share is a performance measure used by the Board to assess the Group's dividend payments. Licence fees, development rebates, rental guarantees and cumulative gains made on disposals of assets are added to EPRA earnings on the basis noted below as the Board sees these cash flows as supportive of dividend payments. This is then divided by the weighted average number of ordinary shares outstanding during the period (refer to Note 8).

Alternative Performance Measures ("APM") - The Group uses alternative performance measures including the European Public Real Estate ("EPRA") Best Practice Recommendations ("BPR") to supplement IFRS as the Board considers that these measures give users of the Annual Report and Financial Statements the best understanding of the underlying performance of the Group's property portfolio. The EPRA measures are widely recognised and used by public real estate companies and investors and seek to improve transparency, comparability and relevance of published results in the sector. Reconciliations between EPRA and other alternative performance measures and the IFRS financial statements can be found in Notes 8 and 9 and in the definitions below.

ANUK - Accreditation Network UK is a central resource for tenants, landlords and scheme operators interested in accreditation of private rented housing.

Average Interest Cost - The weighted interest cost of our drawn debt portfolio at the balance sheet date.

Average term of debt - The weighted average term of our debt facilities at the balance sheet date.

Basic EPS - The earnings attributed to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period (refer to Note 8).

Colleague Engagement - KPI - Non-IFRS measure - Calculated as per the results of our biannual colleague engagement surveys.

Company - Empiric Student Property plc.

Customer Happiness - KPI - Non-IFRS measure - Calculated per the results of our biannual customer surveys.

Dividend Cover - Adjusted earnings divided by dividend paid during the year.

EPRA - European Public Real Estate Association.

EPRA EPS - Reported on the basis recommended for real estate companies by EPRA (refer to Note 8).

EPRA NAV - EPRA NAV is calculated as net assets per the Consolidated Statement of Financial Position excluding fair value adjustments for debt-related derivatives (refer to Note 9).

EPRA Net Disposal Value ("NDV") - Represents the shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. As the Group is a REIT, no adjustment is made for deferred tax.

EPRA Net Reinvestment Value ("NRV") - Assumes that entities never sell assets and aims to represent the value required to rebuild the entity.

EPRA Net Tangible Assets ("NTA") - Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.

EU - European Union.

Executive Team - The Executive Directors made up of the CEO and CFO/CSO.

GHG - Greenhouse gas.

Gross Asset Value or GAV - The total value of the Group's wholly owned property portfolio (refer to Note 13).

Gross rent - The total rents achievable if the portfolio was 100% occupied for an academic year.

Gross margin - Gross profit expressed as a percentage of rental income.

Group - Empiric Student Property plc and its subsidiaries.

Hello Student^® platform - Our customer-facing brand and operating system which we operate all of our buildings under.

HE - Higher education.

HMO - Homes of multiple occupants.

IASB - International Accounting Standards Board.

IFRS - International Financial Reporting Standards.

IPO - The Group's Initial Public Offering in June 2014.

LIBOR - London interbank offered rate.

Loan-to-value or LTV - A measure of borrowings used by property investment companies calculated as total drawn borrowings, net of cash, as a percentage of Property Value (refer to Notes 13 and 17).

Net Asset Value or NAV - Net Asset Value is the net assets in the Statement of Financial Position attributable to ordinary equity holders.

Non-PID - Non - property income distribution.

PBSA - Purpose Built Student Accommodation.

PID - Property income distribution.

RCF - Revolving credit facility.

Rebooker Rate - KPI - Non-IFRS measure - Calculated as the percentage of students staying with us in the previous year who chose to stay living with us for another academic year.

REIT - Real estate investment trust.

Revenue Occupancy - KPI - Non-IFRS measure - Calculated as the percentage of our Gross Annualised Revenue we have achieved for an academic year.

RICS - Royal Institution of Chartered Surveyors.

Safety - Number of accidents - KPI - Non-IFRS measure - Calculated as the number of RIDDOR accidents reported to the Health and Safety Executive.

Senior Leadership Team - The senior management team which sits beneath the Executive Team and is made up of the six department heads.

SONIA - Sterling Over Night Index Average is the effective reference for overnight indexed swaps for unsecured transactions in the Sterling market. The SONIA itself is a risk-free rate.

The Code - UK Code of Corporate Governance, as published in 2018.

Total Return ("TR" or "TAR") - The growth of NAV per share plus dividends per share measured as a percentage,

Total Shareholder Return - Share price growth with dividends deemed to be reinvested on the dividend payment date.

UKLA - United Kingdom Listing Authority.

Company Information and Corporate Advisers

Company Registration Number: 08886906

Incorporated in the UK

(Registered in England)

Empiric Student Property plc is a public company limited by shares

Registered Office

1st Floor Hop Yard Studios,

72 Borough High Street,

London, SE1 1XF

DIRECTORS AND ADVISERS

Directors

Mark Pain (Chairman)

Duncan Garrood (Chief Executive Officer)

Lynne Fennah (Chief Financial and Sustainability Officer)

Martin Ratchford (Non-Executive Director)

Stuart Beevor (Non-Executive Director)

Alice Avis (Non-Executive Director)

Broker and Joint Financial Adviser

Jefferies International Ltd

100 Bishopsgate

London EC2N 4JL

Broker and Joint Financial Adviser

RBC Europe Limited

Riverbank House

2 Swan Lane

London EC4R 3BF

Legal Adviser to the Company

Gowling WLG (UK) LLP

4 More London Riverside

London SE1 2AU

Company Secretary

Throgmorton UK Limited

6th Floor, 140 London Wall,

London, EC2Y 5DN

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Auditor

BDO LLP

55 Baker Street

London W1U 7EU

Communications Adviser

Maitland/AMO

3 Pancras Square

London N1C 4AG

Valuer

CBRE Limited

Henrietta House

Henrietta Place

London W1G 0NB

Empiric Student Property plc

1st Floor Hop Yard Studios,

72 Borough High Street

London

SE1 1XF

T +44 (0)20 8078 8791

E info@empiric.co.uk

More information on

www.empiric.co.uk

Empiric Student Property plc

1st Floor Hop Yard Studios

72 Borough High Street

London

SE1 1XF

T +44 (0)20 3828 8700

E info@empiric.co.uk

More information on

www.empiric.co.uk

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